Retail Forex broker KVB Kunlun Financial Group Ltd (HKG:8077) today delivered a set of strong financial metrics for 2014, as the company has managed to benefit from the improved volatility in the latter part of last year. Profits and income rose on annual basis, as the group targets development of its Chinese business in 2015 and expects benefits from its deal with CITIC Securities Company Limited (SHA:600030).
During the first eight months of 2014, the market was quiet and volatility hit historically low levels, while in the last four months of the year, due to economic and geopolitical factors, the market volatility rose significantly. This has led to higher trading volume that has in its turn led to higher leverage foreign exchange trading income in the last four months of the year. Moreover, the group saw higher transaction volume for market maker hedge and natural hedge resulting in higher cash dealing income.
Let’s take a look at some key performance metrics:
- Net profit for the year to the end of December 2014 was HK$35.1 million (US$4.53 million), marking an increase over the HK$34.8 million profit recorded in the year ended December 31, 2013. The net profit margin for the year ended 31 December 2014 was approximately 18.6%.
- The total income of the Group increased by approximately 6.7% year-on-year to approximately HK$188.6 million for the year ended 31 December 2014. This compares to approximately HK$176.7 million of income posted in the year ended 31 December 2013.
- The leveraged foreign exchange and other trading income of the Group increased by approximately 6.4% to approximately HK$144.2 million for the year ended 31 December 2014 from approximately HK$135.5 million for the year ended 31 December 2013.
- The Board recommend the payment of a final dividend of HK1.075 cents per ordinary share to the shareholders. The final dividend, if approved by the shareholders at the forthcoming annual general meeting to be held on May 6, 2015, will be paid on May 21, 2015, to the shareholders whose name appear on the register of members of the Company on Thursday, 14 May 2015. The final dividend has been agreed with CITIC Securities.
Strategic plans: Chinese business development
The new PRC subsidiary located in Zhuhai City Hengqin New District has been setup and the Group is expecting further progress in this new subsidiary in the coming year. The Group will continuously conduct studies on identifying hot spots to develop new branches or subsidiaries; and perform market studies to explore commercial viability for new products. During the year under review, the Group had developed new financial services and products through internally generated funding. The Group spent HK$6.3 million in 2014 to revamp the network in order to keep on improving the efficiency, security, availability and manageability of the online trading platform.
CITIC deal
In the section entitled “EVENTS AFTER THE REPORTING PERIOD”, KVB Kunlun’s management refers to the deal with CITIC Securities Company Limited (SHA:600030), which LeapRate has been covering in detail.
A brief recap: On 29 January 2015, the controlling shareholder of the Company (the “Vendor”) and CITIC Securities Company Limited (“CITIC Securities”) entered into a conditional share purchase agreement (the “Share Purchase Agreement”) in relation to the sale and purchase of 1,200,000,000 shares of HK$0.01 each in the share capital of the Company owned by the Vendor (each a “Sale Share”), pursuant to which CITIC Securities conditionally agreed to acquire and the Vendor conditionally agreed to sell the Sale Shares, for a total consideration of HK$780 million. This means a price of HK$0.65 per share. The Sale Shares represent 60% of the then entire issued share capital of the Company. Completion of the Share Purchase Agreement (“Completion”) is expected to take place upon fulfillment of the conditions set out in the Share Purchase Agreement.
Today’s news sent KVB’s share price higher – at one moment one share traded for as much as HK$1.50. The spike is obvious on the chart below.
Photo credit: Google Finance.
The official announcement of KVB Kunlun’s 2014 financial metrics can be found here.