KASPI Stock Analysis - Hard To Find Much Wrong... NASDAQ: KSPI

Good day, fellow investors. A highly-requested stock's dividend yield now going towards 9% P/E ratio of seven growing at 17% and it's very hard to find anything wrong with this. Let's discuss. Kaspi, as we discussed Grab just a few days ago, there was really a lot of strong strong comments there. Clean case, Kaspi, own Kaspi. This is interesting but not as good as Kaspi. It's the fabric of society. It's a monopoly and that is right. I went on to write a short overview for my research platform because when you see dividend yield of 8% growth at around 15% high cash all good, it's hard to not write about it. When you look at the company, it is a super app in Kazakhstan. Simply terrifying. Plus, they recently acquired an e-commerce, now banking license, and building that ecosystem also in Turkey. If you look at the company, everything it In Kazakhstan, it's practically everything. 85% of the country's payment processes, 70% of market share in consumer commerce. Kazakhstan adults open constantly the app even for healthcare, for everything in the country. It is a super app. It is defended by the country. It's so integrated with the government that it creates a monopolistic position where without the government it wouldn't work or it wouldn't work anywhere else in the world, but in Kazakhstan it works. Deep state integration, government services, banks. So, when short seller Culper Research issued its explosive report accusing Kaspi of violating Russian sanctions, the National Bank of Kazakhstan and and state financial regulators immediately issued public statement defending the company. If the company collapses, it would paralyze daily financial transactions 15 million Kazakh citizens. So, too big to fail and also politically untouchable. That's called a monopoly. It is key to understand that such a monopoly doesn't exist without government support. For now, it is there. No questions about it. From an investing perspective, there is nothing more you can wish than to have a monopoly, a legal monopoly, that just prints money. Kazakhstan, the stan part of it, might be questionable, but that might also be the positive of it because this can only work in Kazakhstan. Now, they are diversifying, so they went and bought Turkish e-commerce leader Hepsi for 1.1 billion, then they acquired Rabobank license, and they will inject into that bank 300 million from their Kazakhstan monopolistic profits. They are turning that e-commerce into also financial solutions provider in Turkey. It is buy now, pay later business in Turkey. The wow is a little bit ironic, but it is there. And no matter how you look at it, e-commerce growing, all numbers, everything looks great. They are doing a lot of business in Turkey, and if they can scale that onto just part of the profitability that they have in Kazakhstan, this could be a big big winner and turning into profitability over time. So, Turkey should be a positive bonus. Currency is always an issue, but they are always adjust to constant currency to dollars and the growth is still there despite the double-digit inflation and interest rates in Kazakhstan. AI developing a personal assistant, they have been very exuberant about their Casper AI in the last conference call. Nothing wrong with it if it helps, great. Great margins if you look at the company, everything is growing. Nothing wrong there. Bought the bank license and they will inject now the money to start offering fintech products and scaling that next year in Turkey. They will integrate everything into the Hepsi e-commerce platform. Marketplace monetization, growing, payments, they simply have a monopoly on the payments and that's it and they are just a toll booth collecting the money, providing the service, everybody happy. And I think the take rate there is lower than the credit cards, the Visa, the MasterCard, which they take 30 or 0.3%, but in all in all when you pay, you pay 2-3% here in the West. So, cheaper. Fintech is growing, credit quality, I see a flatline, which is good, but there are also non-performing loans, 6-7% growing a little bit, something that the financial guys here watching will tell me in the comments. Is it big? Is it not big? 15-16% is the interest rate, so they can survive with those non-performing loans. But it's still a financial company underneath everything. Net income growing, stable depending on the currency, a little bit on the investment down, but everything looks good. Great net income margin. It was 27% interest. The benefit of the declining interest will be shown Q2 end of next quarter or just one quarter in the year, but over time should do okay. Guidance is there, double-digit growth. EBITDA not yet growing, but the long-term looks good. Let's discuss the financials. You can see here big business also in Turkey. It will likely grow with everything. If they can just turn it profitable, there could be a great benefit there. Now, if I look at the balance sheet, it is a bank after all. 15 billion loans to customers, customer accounts 17 billion. So, if there is a run on the bank or something like that in Kazakhstan, it might happen. You never know. Then, that is perhaps the key risk. It is, after all, a financial. Financial in Kazakhstan, financials always trade at P ratios of eight, nine. They seem always so cheap. There must be some risk underneath there that makes them trade this cheap. But, this is a financial that then is not growing 3%, but 15. With all the fintech, with all the high margins, a different story. However, I've looked a little bit at the annual report, 5%, 6%, and now we are getting into seven on the non-performing loans. Likely no issue, but interesting to just watch. Our customers might be susceptible to the deliberate spread of rumors or false information. Maybe one day it will be right information, you never know. In their past, there have been several occasions on which misleading information regarding the instability of certain Kazakhstan banks. Keep in mind the interest rate there is 15% from their central bank. Things like that. They managed that in the past, but it is a risk. Then the key risk perhaps everything is integrated with the government. As long as it holds, great. But if that changes, then something changes. Just to keep in mind, I'm not predicting. So, in general, we have a P ratio of eight on 15% growth, 8% dividend yield going towards now. Super monopoly, Turkey expansion potential. P half of the growth, worst case there should be a margin of safety. We have by calling the CEO an amazing capital allocator, great manager, plus being a monopoly. Now, when it comes to being a great manager, when you have the political connections to create a government integrated super monopoly app in one country, you're great at bribing politicians or making them go hand in hand with you. We'll see now if he proves himself in Turkey again, then yes, nothing to argue against it. But now there is this one government connection tailwind that I'm from Eastern Europe, the stans are even worse than here. So, you know that there is something behind it. However, even doing that in a country like Kazakhstan, it's already a miracle, so hats off. But then we have Turkey. But then again, it's P ratio eight, 8% yield. The stock is fairly priced. The company has been growing at double digits. The stock has doubled over 6 years plus the dividend. It's not that crazy. I will remove Kaspi from the bets and value it as 8% plus growth. Just high risk because it's Kazakhstan. We learn more about it over time. I'm considering purchasing it for my diversified portfolio. I might be doing that end of the month when I do the review with all the new interesting situations that I have found. But, it's hard to find something wrong there. I have 48% in cash, 50% in cash. I'm looking for new additions for my diversified portfolio. And when it comes to reasons not to buy this, it's hard to find one. Yes, it's Kazakhstan. Yes, it's a fintech. But then it's so cheap for what it is offering. The upside risk, it's very interesting. On top of everything, Tencent invests. So, you have that Silk and Belt Road connection, China. That's what they are building. That global ecosystem going into Turkey, political connections, super app, 25 million customers. That's already something. The founders are there owning the company, big stakes there. So, that might be a positive. Of course, there are always rumors, press, non-traditional media, wide variety of matters, corruption, this and that. That will always be the case in Kazakhstan. They do own 66% of the capital. And without them, this doesn't work. It's not like somebody can come and uh it over because then you lose the political connections and the value is gone. I have put it on my covered stock list, written about it, but still contemplating, okay. And I'm also will get feedback in your comments and then see whether it's really fits also compared to other options that I cover and I'm contemplating. Then I'm thinking Pabrai that really loved it that now discusses Kaspi as this holy grail of investing. But keep in mind Pabrai has had many love affairs that have ended badly from the zinc uh from the rain industries, what was it, things like that. Then sells, forgets about it, and goes to the next love affair. So, very smooth talker, but from his stand positions here, Kaspi could be very interesting. And I also agree on his portfolio exposure. And if you look a little bit at what I'm doing now, we have grabbed, we have UK home builders, we have the car stocks, we have LVMH, Vistry, another UK home builder, uh REIT, SoCs, Xiaomi, McDonald's, a lot of company analysis. As I'm looking for investment ideas to put on my covered stock list, to put on my public quadrant, or on the premium one on my research platform. And Kaspi, that we have discussed, hits a lot of interesting bells there. Let's see exposure. And what I like to do is and that's also a reason why I'm implementing that diversified portfolio. If I open a position, I can learn over it over a year, over 2 years, and then you really start to knowing the ins and outs of something. And then perhaps it can get into my model and private portfolio down the road. So, for now, very interesting situation, hard to find why not. I'm looking forward to your comments.