BUTTERWORTH (Nov 11): Southern Steel Bhd expects another year of losses for the current financial year ending June 30, 2016 (FY16), before it marks a return to the black in FY17, helped by higher revenue from a new hot rolled coil (HRC) steel product under its upstream segment.

Its managing director Chow Chong Long told reporters that the turnaround also hinged upon the federal government's favourable decision on trade imposition or Chinese anti-dumping measures to protect the domestic market caused by the imports.

Chow said RM1 billion was invested in its wholly-owned unit Southern HRC Sdn Bhd in 2012 to set up a new line to produce the new HRC product, which is currently dominated by one major player.

He said total demand for HRC in Malaysia amounts to about 4 tonnes per year, half of which is sourced locally and the rest imported.

"Our plant's capacity is about 700,000 tonnes per year, but we are producing about 10,000 tonnes to 15,000 tonnes per month to cater to the shortfall not met by our competitor.

"We are able to produce more but we are not right now due to the prices as a result of the HRC dumping by Chinese corporations," he said after the group's annual general meeting.

For FY15, Southern Steel posted a net loss of RM117 million from RM19.9 million the previous year. Revenue fell to RM2.5 billion from RM2.8 billion in FY14 due to depressed selling prices.

Southern Steel shares closed unchanged at 92 sen today, for a market capitalisation of RM385.9 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)