On 29^th March 2025, we celebrated the sixth anniversary of the AFC Uzbekistan Fund. Over these years, Uzbekistan has experienced substantial development both on a local and geopolitical level, becoming arguably the most influential country in Central Asia, and attracting significant investments and interest from the Middle East, Russia, China, and the West.

Over the past several years, it has become abundantly clear that Central Asia is a new geopolitical battleground for influence as the region connects “East and West” while being significantly influenced by Russia and China. One only needs to look at the “hermit” country of Turkmenistan, which is looking to enter the global geopolitical arena in recent months, leveraging its geographic importance from a logistical standpoint, as well as through its vast energy reserves, specifically natural gas.

While the region, including Uzbekistan, is developing nicely, the fund is continuously building positions in top-tier listed companies that are best-positioned to benefit from Uzbekistan’s economic growth. Although the economy is currently experiencing a temporary slowdown after rapid growth since opening up in 2016, with non-performing loans rising to 4.5% in February 2025 and a deceleration in luxury housing construction (while economic housing construction continues to advance), our core financial services holdings continue to thrive.

In March 2025, the Uzbek Commodity Exchange (TSE: URTS) reported its full-year 2024 results, with earnings per share soaring by 39.4% to UZS 852.91, up from UZS 611.56 in 2023. URTS's EPS in 2024 represents a staggering increase of 1,115% since we began acquiring shares through the AFC Asia Frontier Fund in 2018. Additionally, its 2024 book value increased by 31.13%, rising to UZS 1,160.17 from UZS 883.20 in 2023. As of 31^st March 2025, URTS trades at a P/E ratio of 3.74x, a price-to-book ratio of 2.74x, and boasts a dividend yield of 12%.

URTS exemplifies the potential of Uzbek companies and is arguably the best-managed publicly traded company in the country. Nevertheless, its share price performance may deter some speculators, as the company's shares have been in a downtrend since 2021. Meanwhile, earnings continue to grow at double digits, maintaining dividend yields in the teens. Considering that this is a monopoly business, the significant undervaluation highlights the potential for a strong re-rating of blue-chip stocks once the stock exchange operates more efficiently and attracts more foreign capital. Patience will be crucial during this correction phase, as the market must evolve sufficiently to unlock value across these companies while the underlying businesses thrive amidst Uzbekistan's growing economy.