Artem Fokin, founder of Caro-Kann Capital, discusses the bull case for Kaspi (KSPI). Kaspi is the dominant fintech in Kazakhstan, and Artem breaks down how it's trading for a value price despite rapid growth and how its dominance will allow it to grow into new sectors of the Kazakhstan economy. (Note:
Underappreciated ST upside driver - Russians. When mobilistion started in Russia in late September it is estimated that more than 200k Russians fled to Kazakhstan. Most of them got Kaspi cards. And these are relative high-earners - software engineers, creative professionals. A lot of them also later moved to other countries but keep using their Kaspi cards generating sweet international interchange fees. Q4 numbers should be very strong
For me the numbers look great - BUT the real challenge is how to think about (and price/quantify) the risk of state intervention/expropriation and/or being caught up in further sanctions.
Also, there is a backdoor way via Kazakhstan financial clearing houses and brokers for Westerners to unload etc Russian ADRs that I had linked to awhile back:
Investors Trapped in Russian Bonds Find Buyers in Kazakhstan (Bloomberg via Yahoo!)
"Registering the debt with a Kazakh clearing house then enables buyers to collect coupon and principal payments, according to the people, who declined to provide additional details or names of companies involved in the transactions.The workaround allows Kazakh firms to reap a quick paper profit for themselves and customers at a time when some international investors remain stuck with billions of dollars worth of ruble debt. Myriad restrictions block foreigners from collecting coupons and principal, but inside the country local investors can receive payments."
Very interesting company. Thank you for sharing. I guess the risk of Russia is pretty substantial and the exposure risk you have already have a heavy weighting in oil and gas.
Underappreciated ST upside driver - Russians. When mobilistion started in Russia in late September it is estimated that more than 200k Russians fled to Kazakhstan. Most of them got Kaspi cards. And these are relative high-earners - software engineers, creative professionals. A lot of them also later moved to other countries but keep using their Kaspi cards generating sweet international interchange fees. Q4 numbers should be very strong
Kaspi keeps coming up in fund updates and reports as a holding - at least one fund has taken profits on it: https://emergingmarketskeptic.substack.com/?sort=search&search=kaspi
Two additional pieces worth reading:
- Write up in the Diff (per his disclosures Byrne subsequently purchased some shares): https://www.thediff.co/archive/kaspikz-how-a-bank-turned-into-a/
- Pretty important question of ultimate ownership: https://www.forbes.com/sites/daviddawkins/2020/11/25/the-two-billion-dollar-mystery-behind-the-ownership-of-london-listed-kazakh-fintech-kaspi/
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For me the numbers look great - BUT the real challenge is how to think about (and price/quantify) the risk of state intervention/expropriation and/or being caught up in further sanctions.
Kaspi keeps coming up in fund updates and reports as a holding - at least one fund has taken profits on it though: https://emergingmarketskeptic.substack.com/?sort=search&search=kaspi
Also, there is a backdoor way via Kazakhstan financial clearing houses and brokers for Westerners to unload etc Russian ADRs that I had linked to awhile back:
Investors Trapped in Russian Bonds Find Buyers in Kazakhstan (Bloomberg via Yahoo!)
https://web.archive.org/web/20221223003125/https://www.yahoo.com/now/kazakhs-scoop-russia-debt-investors-045245236.html
https://www.yahoo.com/now/kazakhs-scoop-russia-debt-investors-045245236.html
"Registering the debt with a Kazakh clearing house then enables buyers to collect coupon and principal payments, according to the people, who declined to provide additional details or names of companies involved in the transactions.The workaround allows Kazakh firms to reap a quick paper profit for themselves and customers at a time when some international investors remain stuck with billions of dollars worth of ruble debt. Myriad restrictions block foreigners from collecting coupons and principal, but inside the country local investors can receive payments."
Very interesting company. Thank you for sharing. I guess the risk of Russia is pretty substantial and the exposure risk you have already have a heavy weighting in oil and gas.
thanks !