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Screenshot of a breaking news alert e-mail from Q2 2017
Hong Kong retail forex broker KVB Kunlun Financial Group Ltd (HKG:8077) has issued a statement warning investors that it expects to record a significant decrease in net profit for the first six months of 2017, as compared to the net profit recorded for the six months ended 30 June
Profit warnings have become something of a bad habit lately at KVB. For the company, controlled by China’s CITIC Securities Company Limited (SHA:600030), this marks four warning quarters in a row after KVB issued profit warnings for Q1 2017, the full year 2016, and for nine months 2016.
This time around, KVB blamed the drop in profitability on:
(i) the decrease in leveraged foreign exchange and other trading income mainly resulted from the low market volatility; and
(ii) the increase in referral fees and other charges mainly caused by the increased commission rebate to external parties (including margin business and PRC operations).
KVB had a very rough Q1, with Revenues coming in at just HK$65.6 million (USD $8.4 million), down 38% from Q4 – and KVB’s slowest quarter since Q1-2015. The sharp drop in Revenues hit the bottom line hard, with KVB posting a Q1 Net Loss of HK$18.9 million (USD $2.4 million).