This article first appeared in The Edge Financial Daily, on May 9, 2016.

KUALA LUMPUR: Hiap Teck Venture Bhd, which has posted a net loss of RM60.03 million for its half financial year ended Jan 31, 2016 (6MFY16), is expecting things to look up for the remaining year, supported by higher steel prices and the strengthening of ringgit.

The steel pipe manufacturer’s executive director Foo Kok Siew said as steel prices have increased 30% to 50%, most steel players are expected to register better financial performances in 2016.

“As [the] market is improving, we are doing slightly better now. We can see some improvement in revenue growth as our revenue will grow in tandem with steel prices,” he told reporters after the group’s extraordinary general meeting (EGM) last Friday.

“In the medium term, I think the worst is over for steel prices which have already [bottomed out],” Foo said, adding that the improvement of steel prices will be reflected in the group’s fourth quarter (4Q) results.

However, as steel prices have gone up so sharply in such a short period of time, he opined that they may undergo a correction later. Therefore, Foo does not expect Hiap Teck to be profitable in FY16, given the large losses in the first six months.

The group’s net losses widened to RM22.81 million in 2QFY16 from RM6.09 million a year ago, mainly due to lower interest income and a higher share of loss from Eastern Steel, the joint venture between Hiap Teck and China Shougang International Trade and Engineering Corp.

To minimise losses, the group temporarily suspended Eastern Steel trial production since October 2015.

Foo said the group’s management and China Shougang International Trade and Engineering meet every quarter to review the market situation to decide the resumption of the steel plant.

“If steel prices are sustainable and we can produce steel in profit, we will start the production,” he added.

Commenting on the big jump in Hiap Teck’s share price, Foo said that this may be due to the market’s reaction to the increase in steel prices, which are expected to boost steel makers’ earnings.

Hiap Teck’s share price jumped 85% year-to-date, shed 3.03% or 1.5 sen and closed at 48 sen last Friday.

In its EGM, the group passed its resolutions including a proposed renounceable rights of five-year 5% redeemable convertible unsecured Islamic debt securities, which is expected to raise gross proceeds of RM213.29 million under maximum scenario.