Left for dead e-commerce
Left for dead compounder with dominant market share. Set to reinstate massive capital returns in 2026.
Note: This is a guest post authored by my friend Chris Paryse.
Chris has 23 years of experience investing across both distressed/stressed credit and special situation equities. For the last 5.5 years he has worked at Foxhill Capital Partners LLC, a single family office managing a portfolio of both credit and equity investments. The founder recently decided to wind down the fund in order to simplify his life. Chris is currently looking for a new seat in the CT/NYC area, but is open to remote opportunities.
I have exchanged ideas/analysis with Chris for several years. Chris is an insightful investor who has a knack for finding off the beaten path situations that are less correlated to the general market. If you are looking to grow your team I encourage you to reach out to Chris. He can be reached via Linkedin.
Kaspi.KZ
(KSPI): $75/share
Market Capitalization: $15.4B
Avg. Daily Trading Volume: 404,476
Executive Summary:
Kaspi (NASDAQ: KSPI) is Kazakhstan’s leading e-commerce and financial services company with over $8B of revenue and over $2B of net income. It operates as a “super app”, much like WeChat in China. This app combines banking (BNPL), payments, e- commerce, as well as government services.
It is estimated that 75% of Kazakhstan’s adult population uses Kaspi on a recurring basis with 60% of the adult population using it daily and the average user transacting over 75 times per month.
Organic revenue growth has recently been in the range of 20% and while that has decelerated from 35-40% in recent years, the growth is extremely strong as Kaspi has become even more penetrated within the economy. This has also translated to 10-15% EPS growth despite headwinds from higher interest rates and a shortage of new iPhones, which I will discuss later in the report.
KSPI currently trades around 6.1x my estimate for 2026 EPS which includes $100mm of losses generated by their recently purchased Turkish subsidiary, Hepsiburada. Ex those losses, KSPI is trading my 5.85x 2026E EPS.
I am bullish on KSPI shares at $75/share for the following reasons:
The business is a long-term compounder as it continues to become more penetrated within Kazakhstan
Management will bring Hepsiburada to significant profitability
The Company is likely to restart capital returns in the form of both dividends and buybacks in 2026
Business Segments:
KSPI operates 3 business segments:
Marketplace
The Marketplace segment is an 3rd party e-commerce platform that connects 750k merchants to 8.5mm customers throughout Kazakhstan. E-commerce market share currently stands at 80% with Temu and a few Russian e-commerce players (Wildberries and Ozone) making up the difference.
While the Russian players have been around for 5-10 years and have made very little progress, Temu appears to be more of a threat given its cheaply priced goods. Where KSPI has built a sizable moat, however, is in delivery times (6-18 hours vs 2-3 weeks for Temu) and access to Buy Now Pay Later (BNPL) loans for their customer base.
I would expect this segment to continue to grow as e-commerce penetration is only 15% in Kazakhstan, which is expected to double within the next 5 years. KSPI is also entering new categories like grocery and auto parts which should continue to bolster the business.
Marketplace represents about 46% of KSPI revenue and 28% of net income.
Payments
The Payments segments monetizes transactions when the app users pay at local merchants. KSPI charges 95bps to process the transactions. Total Payment Volume (TPV) exceeds $70B and has been growing at 20%. Over 85% of adults in Kazakhstan use KSPI payments.
The Payments segment is KSPI’s most profitable segment with 16% of revenue and 40% of net income.
Fintech
The Fintech segment serves two functions:
It is a deposit account for app users
Those deposits are used to fund BNPL loans for purchases in the e-commerce platform
Cost of risk has stayed very low at around 2% as KSPI has tremendous information on its borrowers for their historical use of the app. If they don’t pay back the loan, they could lose access to the app which has become entrenched in most people’s everyday lives.
The Fintech business produces 38% of revenue and 32% of net income.
Current Situation
Since the summer of 2024 KSPI shares are down ~42%. There have been two primary fundamental drivers for this correction.
When KSPI made its initial purchase of Hepsiburada shares in October 2024 for $1.1B, the Company decided to shut off the dividend and buybacks in order to maintain a conservative balance sheet. $1.1B represented less than 50% of KSPI’s annual free cash flow and KSPI sits on a net cash position (excluding deposits) so shareholders were disappointed by the conservatism.
In March 2025 the government of Kazakhstan implemented a rule requiring all smartphone imports to pay a duty. This caused smartphone prices to rise 20% overnight, causing a major decline in smartphone sales (down 38% in Q3 2025). There has also been a shortage of iPhones coming into the country from Apple. This has created a sizable headwind of 800bps to Gross Merchandise Value (GMV) growth in Q3 2025amd a 300bps hit to Net Income.
KSPI historically had traded around 10x earnings with a 5% dividend yield, but those metrics have subsequently dropped to ~6x and 0% respectively as earnings growth has slowed and the shareholder base became unanchored with the lack of dividends and buybacks.
Hepsiburada Acquisition
In October 2024 KSPI announced its largest acquisition ever with a $1.1B purchase of 66% of the equity of Hepsiburada, the 2nd largest -commerce platform in Turkey.
They currently own 85% of the business as they have continued to buy out minority shareholders. Hepsiburada currently generates about $1.9B of revenue but loses around $100mm of net income. Hepsiburada has 15% market share in Turkey which is a distant 2nd place to Trendyol, who has about 50%.
While an investment in KSPI does not hinge on the successful outcome of this acquisition, it could provide material upside over the next 5 years if management can turn around the business. Below are the primary reasons KSPI made this acquisition despite current losses:
Turkey and Kazakhstan have similar populations from a cultural perspective.
Trendyol is viewed as being 10 years behind where KSPI is in Kazakhstan given
average delivery time of 5 days and no integration with BNPL.
KSPI is in the process of purchasing a bank in order to deposit fund an eventual
BNPL business to help drive sales growth.
Consumer satisfaction scores are very high for Hepsiburada.
Management built KSPI from nothing and believe they have the experience to turn this business around and grow it significantly.
If all works according to plan, KSPI expects Hepsiburada to be able to generate $1B of net income in the next 5 years. That would be another $5/share of EPS.
Management Team
KSPI is led by Mikheil Lomtadze, a former private equity investor from Baring (which owns ~20% of KSPI stock) and HBS graduate who transformed a small bank purchased in 2000 into the “super app” it is today.
Lomtadze has executed this business remarkably through the years and especially since the Company’s IPO in 2020. He also owns over 20% of the equity. The Chairman, Vyacheslav Kim, is a co-Founder and also owns over 20% of the stock and is primarily responsible for regulatory and political issues.
Valuation
KSPI earned ~$2B in net income in 2024. That is expected to grow to ~$2.2B in 2025 held back by a $100mm loss coming from Turkey. With iPhone sales expected to normalize due to supply returning and anniversarying the duty, I would expect net income to rise to ~$2.5B in 2026 again burdened by about a $100mm loss from Turkey. This represents over $13/share of EPS.
EPS is a good proxy for free cash flow as capex is minimal and equates closely to D&A, so KSPI trades for about 6x EPS and FCF despite growing the core Kazakhstan business’s earnings by close to 20%. If KSPI can get Hepsiburada to breakeven and KSPI compounds at 20% for the next 5 years, we could have business earnings over $30/share by 2030. At its historical 10x multiple, the stock could trade at $300 or a gain of ~280% (over 30% annualized).
In addition, Hepsiburada has the potential to earn another $5 per share in EPS over the coming years. This would create an additional $50/share of potential value that the market is giving zero credit for today.
Catalysts
The primary short-term catalyst is a resumption of capital returns which I would expect in early 2026. Management has indicated that they could return upwards of 50% of their free cash flow back to shareholders. I expect that this will be weighted towards dividends, as the management team likes to receive that cash stream and the resumption should bring back the shareholder base that was lost when the dividend was paused in 2024.
This level of capital return would represent around an 8% yield on the current market cap. Given that the float is only around 40% of shares outstanding, a sizable buyback could also have a material effect on the share price.
The return of iPhone sales should also serve as a catalyst for earnings in 2026. While it wasn’t a major headwind at 300bps, investors will likely be happy to see GMV growing at a healthier clip than it did in 2025.
Risks
Reacceleration of inflation in Kazakhstan could cause the Central Bank to increase rates which would have a negative effect on the funding expense of the BNPL business.
The currency (Tenge) could weaken causing USD translation to be worse. Currency depreciation has averaged about 4% per year over the last 5 years.
Hepsiburada could take much longer to turnaround and require more capital.
There could be political risk in Kazakhstan. While the current President has
introduced capitalistic reforms and has championed KSPI, Kazakhstan still wields a sizable amount of state control over the economy. This is the primary reason why I would not expect much multiple expansion beyond 10x here. The current President’s term ends in 2029.
Chris owns shares of KSPI
Nothing contained herein is investment advice or should be construed as investment advice. This article feature may feature less liquid securities. Extra time and caution should be used before making any investment decisions - always do your own diligence. The full disclaimer can be found here.