The Hong Kong retail forex broker expects to report a Q1 loss — lower volumes, higher marketing expenses.
It seems as though becoming a public company doesn’t necessarily solve all problems for retail forex brokers.
Hong Kong based retail FX broker KVB Kunlun (HKG:8077), which went completed its IPO last July on the Hong Kong Stock Exchange, has issued its first profit warning as a public company. KVB warned that it would report a loss for the Q1-2014 period, after reporting improved profitability in the second half of last year.
KVB attributed its expected Q1 loss to a combination of:
- reduced market volatility (and thereby lower volumes),
- a rampup in marketing expenses during Q1, and
- expenses related to the grant of share options to senior KVB employees.
KVB didn’t give any specific numbers as to the size of the loss. We should know more when the company releases actual figures in about two weeks.
While everyone in the retail FX world understands that things don’t necessarily move in a straight line in the industry, KVB’s results contrast sharply with those of Plus500 (LON:PLUS), which went public at around the same time as KVB. Plus500 has been more successful at leveraging its reputation as a public company to grow volumes and revenues — its quarterly revenues topped $60 million in Q1, up from $50 million in Q4 and results in the sub-$25 million range before going public.
Plus500 has seen its shares increase more than 5 times since going public. KVB’s shares linger below their IPO price.
To see the KVB Kunlun Q1 profit warning click here (pdf).