
The market is hugely underestimating the potential of Uzbekistan, the most populous nation in Central Asia that is quickly becoming a tech powerhouse. This is creating a buying opportunity for shares of London-listed TBC Bank Group, according to a new research report by Peel Hunt brokerage.
“In our view, TBC’s share price ignores the game-changing dynamics of TBC UZ [the Group’s digital bank in Uzbekistan], which we expect to supercharge the growth and profitability of an already high performing group. Our target price rises 36% to 5,000p as we include Uzbekistan on a stand-alone basis and we retain our high conviction Buy,” Robert Sage and Stuart Duncan, analysts with Peel Hunt in London, wrote in a report dated December 4th.
TBC Bank Group includes TBC Uzbekistan – the largest digital banking ecosystem in Central Asia, valued at £1.06 billion ($1.35 billion) by Peel Hunt. TBC Uzbekistan serves 17 million users and includes TBC UZ, the country’s largest digital bank, Payme, a leading digital payments app for individuals and small businesses, and Payme Nasiya, an installment credit business.
It is led by a management team experienced in building high-growth yet consistently profitable banking operations, including CEO Nika Kurdiani and Chief International Growth Officer Oliver Hughes, who was CEO of Tinkoff between 2007-2022.
The Group’s shares have taken a hit alongside other equities of companies operating in Georgia because of the political turmoil in the country. However, investors have failed to appreciate the full potential of Uzbekistan – an underbanked market with a consistently growing GDP, and still an “unknown entity’’ for many international investors – and its impact on TBC’s bottom line, according to the brokerage.
“Powered by leading-edge technology, which facilitates customer service levels materially superior to its competition, TBC UZ is relentlessly winning market share in target products (Instant Cash Loans in the first instance) and we expect it to exceed its 80%+ loan growth CAGR target for 2023-25,’’ Peel Hunt wrote in the report, after visiting the Uzbek capital Tashkent. “The ROE should rise further (we estimate into the mid 30%s) as it scales up. The period of hyper growth seems long-dated to us as new products and services are rolled out and management’s focus on profit will remain, leading to strong value creation for equity investors.’’
TBC UZ has recently launched Salom Card, its new flagship debit card product for Uzbekistan, following announcements of strategic partnerships with Visa and Mastercard. Last month, TBC also unveiled its own payments processing center in Uzbekistan – a significant step enabling the Group to accelerate the pace of new product launches in the country.