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AFC Uzbekistan Fund valuations as of 31st August 2025:
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Estimated weighted harmonic average trailing P/E (only companies with profit):
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3.58x |
| Estimated weighted harmonic average P/B: |
0.62x |
| Estimated weighted portfolio dividend yield: |
3.11% |
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With public companies in the process of filing second-quarter earnings, we continue to see impressive results across the financial services industry, in particular, as the country's rapid credit boom from 2018 to 2022 has cooled down, leading to some banks returning to issuing dividends.
Two companies we watch closely and which continue to outperform off the back of the strong economy are Hamkor Bank (TSE: HMKB) and the Uzbek Commodity Exchange (TSE: URTS).
Hamkor Bank is one of the top private banks in the country, headquartered in the far eastern region of Uzbekistan in Andijan, which has a strong shareholder base of international development institutions and private equity funds. Second quarter numbers continued to be strong for Hamkor Bank, with YoY trailing twelve months (TTM) earnings growth of 22%, reaching UZS 12.93 per share. Book value grew 35% over the same period to UZS 46.88 per share. Compare this to TTM earnings from 30th June 2020 of UZS 2.64 per share and book value per share of UZS 10.09, and the growth is phenomenal. Over the past five years, TTM EPS has grown 389% while book value per share has grown 364%.
We get asked frequently why the dividend yield of the AFC Uzbekistan Fund has decreased over the past few years, to which our response is that companies cut dividends in the past couple of years since Uzbekistan's re-engagement on the world stage in order to fund rapid growth. We have said that as operations stabilise and companies, in heavy industry specifically, conclude their capex programs, dividends should return. HMKB is one such example announcing a return to dividend payments with an extraordinary general meeting held on 29th August 2025, where it was approved to distribute UZS 1.25 per share in dividends to both common and preferred shareholders. This is a sign to us that the banking industry is entering a state of more stable growth. Historically, banks facilitated rapid credit growth but were hindered by a lagging deposit base, and were instead supported by soft loans from international development institutions. Hamkor ended August trading at a P/E of 2.48x, a price to book value of 0.70x, and hosts a dividend yield of 4.06%
Another company we like is the Uzbek Commodity Exchange (TSE: URTS), which again reported fantastic numbers. URTS is the blue-chip we remain most excited about. The government has used URTS as a platform to facilitate tendering of materials, enhancing transparency in procurement to eliminate corruption. The company is an asset-light tech company which recently introduced derivatives trading and is moving into electricity and energy trading, two areas which should be key growth drivers for the company in the future, as URTS is yet another company highly leveraged to Uzbekistan's fast-growing economy. Further, URTS is easily understood by investors and, being headquartered in Tashkent, is typically the first public company a foreign investor will meet with and likely seek to own shares in as well.
URTS had another strong quarter of performance in the second quarter, with trailing twelve months earnings growth of 24% and equity growth of 65%. When looking at how far the company has come over the last five years, from the second quarter of 2020, TTM earnings per share have grown 328% and book value has grown 311%. URTS ended August trading at a P/E of 5.04x, a price to book value of 3.71%, and hosts a dividend yield of 8.88%.
