Kaspi.kz (NASDAQ: KSPI) – The super-app trading at a 6x P/E While Generating 50%+ ROE

When a company delivers 50% return on equity, dominates its domestic market with 75% population penetration, and grows revenue 20% year over year, you’d expect investors to celebrate. When that same company trades at a forward price-to-earnings ratio below 7, you’d expect confusion. When management responds to short-seller attacks by launching a $100 million share buyback program while suspending dividends to fund growth, you’d expect clarity about strategic priorities.

Kaspi.kz offers all three simultaneously. This is the essential paradox of investing in one of Central Asia’s most operationally impressive technology platforms.

The business that works too well

Kaspi operates Kazakhstan’s dominant super-app ecosystem. Think WeChat for a country of 19 million people, except Kaspi controls not just messaging and payments but also e-commerce, fintech lending, and the merchant infrastructure that powers 80% of the country’s small business payment processing.

The numbers from Q3 2025 tell a straightforward story. Revenue hit 797 billion tenge (approximately $1.5 billion equivalent), up 20% year over year. Net income reached 307 billion tenge, up 12% year over year. The company maintains what’s called Rule of 40 status, meaning its growth rate plus profitability margin exceeds 40%. In Q3, Kaspi posted 23% revenue growth plus 24% EBITDA margin, hitting 47%. Only elite technology companies sustain this performance for multiple years. Kaspi has done it for 18 consecutive quarters.

More importantly, the company’s engagement metrics are absurd. Out of 14.7 million monthly active users, 10.1 million are daily active users. That’s a 68% DAU-to-MAU ratio, matching Facebook and Instagram levels. For a financial services and e-commerce platform, this is essentially infrastructure-level usage. The average Kaspi user completes 76 transactions per month, not 76 per year. That frequency rivals Starbucks loyalty programs and Amazon Prime shopping behavior.

The business model creates a closed financial loop. Consumers use the Kaspi app to pay bills, buy products on the marketplace, and receive instant “buy now, pay later” financing at checkout. Merchants use Kaspi Pay to accept payments, access working capital loans, and receive instant settlement. The deposits consumers hold in Kaspi accounts fund the loans Kaspi extends to consumers and merchants. This creates perpetual motion: more services drive more deposits, more deposits fund more lending, more lending drives more transactions, more transactions require more services.

What’s critical is that this isn’t theoretical. Kaspi processes 85% of Kazakhstan’s cashless transactions. The company controls 41% of e-commerce and 35% of the payments market. When 80% of the country’s small businesses rely on your infrastructure to get paid, you’re not a tech platform. You’re economic plumbing.

The three engines and why they matter diffedrently

Kaspi breaks its business into three segments, and understanding their different dynamics explains both the bull and bear cases.

Payments generated 172 billion tenge in revenue in Q3 2025, up 10% year over year, with net income up 12%. This is the mature, high-margin foundation. Every incremental transaction costs almost nothing because the infrastructure is built. Growth is steady, profitability is expanding, and this segment funds everything else.

Marketplace generated 222 billion tenge in revenue, up 24% year over year, but net income only grew 7%. This gap matters. Revenue is growing twice as fast as transaction volume (GMV up 12%), meaning Kaspi is successfully raising its take rate through higher-margin services like advertising (up 56% year over year) and delivery. But profit growth is lagging because the company is deliberately investing in lower-margin, high-frequency categories like grocery delivery. This is the Amazon playbook: sacrifice near-term margin to lock users into daily habits.

Fintech generated 410 billion tenge in revenue, up 24% year over year, with net income up 15%. This is the growth engine. Total financing volume hit 3 trillion tenge, up 16% year over year. Cost of risk (bad loans) remains at just 0.6%, which is spectacularly low for unsecured consumer lending. The reason: data advantage. Because Kaspi sees every purchase, every bill payment, every merchant transaction, it can underwrite credit far more accurately than traditional banks that only see credit bureau reports.

The competitive moat isn’t the technology. It’s the closed loop. Halyk Bank, Kazakhstan’s largest traditional bank, operates a competing app called Homebank with 8.5 million users. But Halyk is a bank trying to become a tech company, adding features to a banking app. Kaspi is a tech company that happens to have a banking license, designing every feature to deepen ecosystem lock-in. That architectural difference is why Kaspi’s users transact 76 times monthly while Halyk’s users probably check balances occasionally.

The valuation that makes no sense

Kaspi trades at a trailing P/E of roughly 6.7. Forward P/E is even lower. Price-to-sales sits around 2.1. For comparison, MercadoLibre trades at 50x earnings. Sea Limited trades at 58x to 74x. Nu Holdings trades at 30x to 34x. These are all emerging market super-apps or fintech platforms with materially worse margins than Kaspi. MercadoLibre’s net margin is around 8%. Sea Limited’s is 6.7%. Nu Holdings manages 21%. Kaspi’s net margin sits between 35% and 42%, depending on the quarter.

Kaspi also generates 50% to 59% return on equity. MercadoLibre manages 33.5%. Sea Limited manages 12%. Nu generates 25%. By every operational metric, Kaspi is the superior business. Yet it trades at an 85% to 90% discount to peers on P/E multiples.

Even locally, the market recognizes Kaspi’s superiority. Halyk Bank, the traditional competitor, trades at 3.2x earnings. Kaspi gets more than double that multiple (6.7x vs 3.2x), but still nowhere near what a dominant technology platform should command.

This creates a dead zone. Kaspi is too expensive for deep-value investors hunting cheap Kazakh banks. It’s too risky for growth investors hunting the next super-app. The stock sits in between, priced for permanent mediocrity despite delivering elite operational performance.

The Turkey bet that’s costing real money

The single biggest strategic risk and opportunity is Kaspi’s expansion into Turkey. The company acquired Hepsiburada, Turkey’s leading e-commerce platform, and is finalizing acquisition of Rabobank’s Turkish subsidiary to secure a banking license necessary for launching fintech services.

The execution playbook is straightforward, aggressively sacrifice near-term profitability to build long-term infrastructure. Hepsiburada’s EBITDA fell 74% year over year in Q3 2025 as Kaspi poured money into delivery improvements, marketing optimization, buy-now-pay-later partnerships with Turkish banks, and UX redesign. Early results show traction: purchases up 16% year over year, GMV up 15%, revenue up 22%.

But this is genuinely expensive and genuinely risky. Turkey is not Kazakhstan. The market is far larger (85 million people vs 19 million), but competition is brutal, the lira is unstable, and consumer behavior is different. Replicating a closed-loop super-app in a market where users already have established banking relationships and e-commerce habits is exponentially harder than building one in a market with weak legacy infrastructure.

If Turkey works, Kaspi’s addressable market increases 4x overnight and the growth narrative completely changes. If it fails, shareholders funded a multi-hundred-million-dollar experiment that destroyed capital. Management clearly believes in the former. They suspended dividends in 2025 specifically to fund Turkey expansion and other growth initiatives, then immediately announced a $100 million buyback program to signal confidence in the core business valuation.

The geopolitical ghost that won’t leave

In September 2024, short-seller Culper Research published a report accusing Kaspi of systematically misleading investors about exposure to Russia and potentially violating sanctions. The stock dropped 16% to 22% immediately. In December 2024, a US securities class action lawsuit was filed based almost entirely on Culper’s allegations.

The core accusation: Kaspi claimed “zero exposure to Russia” in IPO documents, but Culper argues that Russian nationals living in Kazakhstan use Kaspi services, Russian companies appear in Kaspi’s partner network, and Kaspi maintained correspondent banking relationships with Raiffeisen Bank Russia. Therefore, Culper argued, Kaspi faces secondary sanctions risk.

Kaspi’s defense was detailed and backed by Kazakhstan’s financial regulator. The company showed that 99.6% of 2023 revenue came from Kazakhstan. All customers, including foreign nationals living legally in Kazakhstan, undergo biometric KYC verification. Partner banks like Raiffeisen are not sanctioned entities. The regulatory agency publicly stated Kaspi “fully complies with the sanctions regime of the U.S., the European Union, and other foreign countries.”

The short-seller’s argument essentially boils down to semantic games. If Russian citizens (legally residing in Kazakhstan) use a Kazakh platform (which complies with all sanction lists), does that constitute “Russia exposure”? Kaspi says no, because the revenue is generated in Kazakhstan from verified, non-sanctioned users. Culper says yes, because some users have Russian passports.

Here’s what matters for investors: major Wall Street banks reviewed these allegations and maintained buy ratings with price targets of $102 to $137. JPMorgan called Kaspi its “top pick for 2025” after the short report. Goldman Sachs reaffirmed its buy rating. These analysts have legal teams and compliance departments that reviewed sanction exposure independently. If secondary sanctions were genuinely likely, US investment banks wouldn’t be recommending the stock to institutional clients.

But perception matters more than facts in markets. The mere association with Russia in headlines creates persistent headline risk that depresses valuations regardless of operational reality. This is precisely why Kaspi trades at 6.7x earnings while Brazilian and Indonesian peers trade at 30x to 70x.

The currency trap nobody talks about

One structural issue that’s underappreciated – currency risk. Kaspi earns tenge, reports in tenge, and holds assets denominated in tenge. The Kazakhstan tenge is historically volatile and correlated with oil prices. A US investor buying KSPI ADS on Nasdaq is making two simultaneous bets: that Kaspi’s business performs well operationally, and that the tenge remains stable against the dollar.

Strong operational performance can be entirely erased by currency depreciation. If Kaspi grows earnings 20% in tenge but the tenge depreciates 25% against the dollar, dollar-denominated investors lose money. This currency risk alone justifies a permanent valuation discount compared to companies operating in stable currency zones.

Additionally, Kaspi is classified as a systemically important financial institution in Kazakhstan, subject to strict regulatory oversight. Changes in reserve requirements, interest rate policy, or fintech regulations directly impact profitability. Q3 2025 results were negatively affected by base rate increases and new smartphone registration rules that temporarily disrupted marketplace sales. These are the realities of operating in an emerging market with active monetary policy.

What management is actually saying

The dividend suspension combined with the buyback program sends a clear message. Management sees two things simultaneously: the stock is dramatically undervalued (hence buyback), and growth opportunities justify retaining capital (hence no dividend).

CEO Mikheil Lomtadze and Chairman Vyacheslav Kim are founder-operators with significant personal stakes. Their net worth moves with the stock price. When they allocate $100 million to buybacks immediately after a short-seller attack that crashed the stock 20%, they’re putting real money behind their conviction that the market is mispricing the business.

The 2026 guidance suggests management expects to balance buybacks and dividends going forward, implying they view the current situation as temporary dislocation rather than permanent impairment.

The real investment question

The decision to invest in Kaspi isn’t about whether the business is excellent. The fundamentals clearly demonstrate elite operational quality. The question is whether you believe geopolitical and currency risks are manageable and currently overpriced by the market.

Bull case: You’re buying a 50% ROE business trading at 6.7x earnings with 20% revenue growth and Rule of 40 status sustained for 18 quarters. Founder-operators are buying back stock aggressively. Wall Street analysts with $102 to $137 price targets (implying 80% to 140% upside) have done sanction due diligence and remain bullish. Turkey expansion, if successful, transforms the growth trajectory entirely.

Bear case: You’re buying exposure to Kazakhstan’s economy, the tenge’s stability, and geopolitical risks in Central Asia. Secondary sanctions, while unlikely based on current facts, remain possible if US policy shifts. Currency depreciation could erase operational gains. Turkey execution could fail expensively.

The spread between current price and analyst targets ($102 to $137) reflects exactly this tension. The asymmetry is compelling if you believe regulatory and geopolitical risks are overstated. The discount is justified if you believe those risks are structural and permanent.

For long-term investors comfortable with emerging market volatility and willing to hold through currency fluctuations, Kaspi at current prices offers meaningful upside optionality funded by one of the most operationally impressive platforms in global fintech. For investors requiring stable, predictable returns in hard currency, the structural risks justify avoiding the position entirely regardless of valuation.

That’s the honest assessment. Kaspi isn’t cheap because Mr. Market is stupid. It’s cheap because the risks are real. The question is whether those risks are being priced at 2x or 10x their actual probability.