The ring of power in J.R.R. Tolkien's Lord of the Rings has an inscription on it. It reads the following: One Ring to rule them all, One Ring to find them, One Ring to bring them all and in the darkness bind them Kaspi, a fintech business in Kazakhstan, has developed a superapp:
I think you may have made a mistake in the "Can Kaspi return a 10x" section. You give Kaspi's GMV as KZT 12 billion, and conclude that Kaspi could therefore become a 10x, since the e-grocery market is projected to reach 750 billion. Small problem, Kaspi's GMV is not 12 billion but 12 trillion KZT.
Thank you fo your due diligence. The 12 Billion KZT was the GMV I mentioned for their nascent e-grocery market so I'm not referring to the total GMV of their marketplace. If I look at the most recent financial results presentation (https://ir.kaspi.kz/financial-information/), they increased their 19 billion KZT GMV (2022) to 69 billion KZT in 2023. I used this as an example to show Kaspi's ability to expand their offering and think they could have the potential to get to a multiple of their current size.
Ah, I understand. Personally, I don't think e-Grocery will be revolutionary for them - they estimate the Kazakh grocery market to be worth $14b. Say 40% of that is in cities big enough for e-grocery to make sense, then within those cities they can capture a very optimistic 50% market share (of all groceries, not just e-groceries). Because groceries are a pretty low margin product, say the profit in total on that is 10%. Then assume profit is split 50:50 between Kaspi and Magnum. Multiply all those rather optimistic numbers together and you get $140m in profit - only about 7% of Kaspi's current run-rate profit. But let me know if your maths looks different.
I agree, even if they capture a big percentage of the market, it will remain a smaller part of total revenue and profits. The idea is that they have this capability of launching new services that quickly grow so there's a sense of unknown optionality to their superapp business model.
Great write-up! The only company from Kazakhstan I was aware of until today was Kazatomprom. Thank you, for providing insights into another hidden game.
I’ve added a link to the analysis of Kaspi in RhinoInsights latest Friday Roundup.
I think you may have made a mistake in the "Can Kaspi return a 10x" section. You give Kaspi's GMV as KZT 12 billion, and conclude that Kaspi could therefore become a 10x, since the e-grocery market is projected to reach 750 billion. Small problem, Kaspi's GMV is not 12 billion but 12 trillion KZT.
Thank you fo your due diligence. The 12 Billion KZT was the GMV I mentioned for their nascent e-grocery market so I'm not referring to the total GMV of their marketplace. If I look at the most recent financial results presentation (https://ir.kaspi.kz/financial-information/), they increased their 19 billion KZT GMV (2022) to 69 billion KZT in 2023. I used this as an example to show Kaspi's ability to expand their offering and think they could have the potential to get to a multiple of their current size.
Ah, I understand. Personally, I don't think e-Grocery will be revolutionary for them - they estimate the Kazakh grocery market to be worth $14b. Say 40% of that is in cities big enough for e-grocery to make sense, then within those cities they can capture a very optimistic 50% market share (of all groceries, not just e-groceries). Because groceries are a pretty low margin product, say the profit in total on that is 10%. Then assume profit is split 50:50 between Kaspi and Magnum. Multiply all those rather optimistic numbers together and you get $140m in profit - only about 7% of Kaspi's current run-rate profit. But let me know if your maths looks different.
I agree, even if they capture a big percentage of the market, it will remain a smaller part of total revenue and profits. The idea is that they have this capability of launching new services that quickly grow so there's a sense of unknown optionality to their superapp business model.
What a deep dive about this hidden gem! Will have to read it again and again. Thanks!
Thank you for the kind words!
Great write-up! The only company from Kazakhstan I was aware of until today was Kazatomprom. Thank you, for providing insights into another hidden game.
I’ve added a link to the analysis of Kaspi in RhinoInsights latest Friday Roundup.