VIX Securities Q1 Profit Plunges 66% Despite 69% Revenue Growth

Overview

VIX Securities reported a sharp divergence in its Q1 2024 results, with revenue rising 69% year-on-year to VND 1,653 billion but pre-tax profit falling 66% to VND 156 billion. This marks the company’s lowest quarterly profit in the last five quarters, attributed to market volatility and surging operating costs. The results underscore the pressure on Vietnamese securities firms amid fluctuating market conditions.

Key Facts

• Q1 2024 revenue: VND 1,653 billion, up 69% year-on-year.
• Q1 2024 pre-tax profit: VND 156 billion, down 66% year-on-year, the lowest in five quarters.
• Operating costs surged 186% to VND 1,340 billion, while financial costs rose 261% to VND 150 billion.
• Proprietary trading recorded a loss of VND 1,308 billion, with net loss in this segment at VND 78 billion.
• Total assets as of March 31: VND 29,600 billion, down 13% from the start of the year.
• Loan balance decreased to VND 12,507 billion from VND 15,380 billion at year-start, the second consecutive quarterly decline.
• Fair value of proprietary portfolio: VND 15,042 billion, up 3% from year-start, with listed stocks at VND 10,668 billion, up 6%.

What Happened

According to its Q1 financial report filed with the Ho Chi Minh Stock Exchange (HOSE), VIX Securities saw revenue growth driven by gains in lending and brokerage segments. However, pre-tax profit fell sharply due to a significant loss in proprietary trading and a substantial increase in operating expenses. The company attributed the weak performance to market developments and trading liquidity pressures, as stated in its explanatory notes to the exchange.

The financial report details that income from financial assets at fair value through profit or loss contributed VND 1,230 billion, or 75% of total revenue. Yet, the proprietary trading segment alone recorded a loss of VND 1,308 billion, resulting in a net loss of VND 78 billion for that activity. Concurrently, the company reduced its loan portfolio for the second straight quarter, while its proprietary stock holdings increased modestly.

Market Context

VIX Securities (ticker: VIX) trades on HOSE, where it closed at VND 18,000 on April 15, 2024, up 0.28% with volume of 48.3 million shares. The Q1 earnings miss occurs amid broader volatility in Vietnam’s securities sector, where firms are grappling with mixed market sentiment and regulatory changes. The stock’s muted reaction on the day may reflect prior market anticipation or a focus on longer-term restructuring efforts.

Strategic Significance

The results highlight VIX’s heavy reliance on proprietary trading, which turned from a major revenue contributor to a significant loss driver, exposing its earnings to market swings. The strategic shift toward reducing loan exposure and managing the proprietary portfolio suggests a risk-control focus, but the 186% operating cost surge indicates inefficiencies or one-time expenses that could pressure margins if sustained. For investors, this underscores the firm’s sensitivity to capital market cycles and its ongoing balance sheet repositioning.

What to Watch

• Q2 2024 earnings release, expected in July 2024, to see if cost pressures abate and proprietary trading recovers.
• Monthly trading volume and market share data from the Vietnam Securities Depository to gauge brokerage performance.
• Updates on loan portfolio trends and asset quality in subsequent financial reports.
• Any regulatory filings regarding changes in operational strategy or cost management initiatives.
• Broader market indices (e.g., VN-Index) and liquidity trends, as these directly impact securities firms’ earnings.