HSBC has named Kaspi shares its top pick for July. Why does it expect them to rise by a third?

In the July edition of GEMs Financials (Global Emerging Markets), analysts at the British bank HSBC named Kaspi shares their “stock of choice.”

They note that Kaspi’s stock price has been declining over the past two years, underperforming the financial sector in the CEEMEA region (Central and Eastern Europe, the Middle East, and Africa). “Rising interest rates, regulatory pressure, and the integration of the Turkish marketplace Hepsiburada have weighed on earnings and investor sentiment,” the authors of the report write.

At its peak, exactly two years ago, Kaspi’s GDR price on the Nasdaq reached $143.72, after which it gradually fell by more than half, dropping to a low of $68.59.

According to HSBC analysts, the prospects for catching up look favorable, as inflation in Kazakhstan is slowing, which supports margins in the fintech sector. Smartphone sales and the integration of Hepsiburada are showing signs of improvement, and the resumption of dividend payments also removes a key factor that had been holding back the company’s valuation.

In 2027, the fintech sector is expected to be the main driver of earnings growth, as declining inflation is currently bringing the real interest rate close to 8%. This gives the regulator room to cut rates in the second half of 2026—which, in turn, should lead to lower financing costs and support business margins. According to HSBC, the resumption of dividend payments should ensure a yield of 8% on the securities in 2026, and since this is still below the level seen “before the Hepsiburada acquisition,” there are expectations of further dividend growth driven by rising profits and an increase in the payout ratio.

The supplementary materials accompanying the study note that Hepsiburada’s losses in 2026 are expected to more than halve compared to 2025. According to HSBC’s estimates, the result in 2027 should be roughly zero, and the business should become profitable starting in 2028. This is expected to add about 4 percentage points to the business’s profitability in 2028.

As a result, projected earnings per share (EPS) for 2026–28 are expected to grow at an average annual rate of about 15%. “Kaspi shares are currently trading at about 7 times expected annual earnings, at a discount of about 15% to the average price over the past four years and significantly cheaper than most CEEMEA financial companies. A potential dividend increase to approximately 10% in 2027 offers an attractive risk premium. Our target price of $119 per GDR implies an upside of approximately 39%,” notes HSBC’s EEMEA banking analyst Cihan Saraoğlu.

Earlier, based on 2025 results, *The Banker* named Kaspi Bank the leader among Asian banks (excluding China and Japan) in terms of return on assets (6.06%) and return on equity (43.01%).

At the close of trading on July 14, Kaspi's shares on the Nasdaq were trading at $88.9, up 0.59% for the day.

This article was AI-translated and verified by a human editor