Retail FX broker KVB Kunlun expects significant profit rise in H1 2018

Maria Nikolova

The expected year-on-year increase reflects an increase in other income resulted from the fair value gain on derivative portion of convertible bonds.

Last year was somewhat challenging for Hong Kong-focused retail Forex broker KVB Kunlun Financial Group Ltd (HKG:6877). Profits in 2017 were negatively affected by higher referral fees and other charges mainly caused by the increased commission rebate to external parties, as well as the decrease in cash dealing income which reflects a decline in trading volume in cash dealing business and revaluation loss on open positions as at December 31, 2017. An increase in administrative expenses mainly due to higher marketing expenses, customer handling fee expenses and computer services expenses also contributed to drop in net profits last year.

This year, however, appears to have started on a much more robust note for the broker. KVB Kunlun has just issued a profit alert concerning the six-month period to June 30, 2018.

Based on the preliminary review by the board of directors of KVB Kunlun on the unaudited management accounts of the Group for the first six months of 2018, the Group is expected to record a significant increase in net profit for the first half of 2018 as compared to the net profit recorded for the six months ended June 30, 2017.

The increase in net profit is attributable to the increase in other income resulted from the fair value gain on derivative portion of convertible bonds for the first half of 2018 which is compliant with the Hong Kong Accounting Standard 39 “Financial Instruments: Recognition and Measurement”, the broker says.

In December last year, KVB Kunlun transferred its listing from GEM to the Main Board of the Hong Kong Stock Exchange.

Back in August 2017, when the Board of KVB Kunlun first announced the planned transfer, the company said it believes that the listing transfer will enhance its corporate profile. This will, in turn, add to the competitive strength of the group and boost the confidence of its investors and stakeholders. The Board said it also expects that the Main Board trading platform will enhance the trading liquidity of the Shares as well as the fund raising capability of the Group.

The Board noted back then that that it has no immediate plans to change the nature of the business of the Group following the Transfer of Listing.

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