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Eric Ng

Online steel-trading platform operator iSteelAsia.com narrowed losses to HK$14.61 million in the three months to September 30, compared with about HK$33.35 million in the preceding quarter.

In the three-month period, completed transaction volume rose 31 per cent to about HK$499 million, while commission income grew 196 per cent to about HK$4.34 million.

Executives of the Growth Enterprise Market-listed company attributed the reduction in net losses to lower technology investment and marketing costs.

'We expect to see a bottom-line profit in the near future as revenues have been growing very fast while our cost increases have slowed,' chief operating officer Drina Yue said.

Research and development expenses amounted to HK$2.4 million in the three months to September 30, substantially lower than HK$14.14 million in the preceding quarter.

Most of the expenditure was for construction of the company's online trading platform.

Marketing and brand-building expenses have fallen to HK$3.01 million year on year, compared with HK$8.25 million previously.

Net loss for the six months to September 30 was HK$47.96 million, compared with a profit of HK$4.95 million in the same period last year.

Turnover in the quarter rose 32.3 per cent year on year to HK$105.45 million.

Analysts usually evaluate results of start-up firms such as iSteelAsia.com by comparing quarter-to-quarter results rather than year on year.

This is because the base of the corresponding previous-year figures of these fast-growing businesses may be too small for meaningful comparison.

The company was launched in December last year as a spin-off from parent company Van Shung Chong Holdings.

Information technology research house Gartner Group's online research director Lane Leskela said having a hybrid business model with traditional and online operations have become a key to long-term survival for many trading businesses.

He said fragmented commodities trading businesses with low profit margins and high transaction volume are the most lucrative to exploit for traditional businesses adopting an online strategy.

Such industries include pulp and paper and publishing, particularly in Asia, he said.



Lower investment, marketing costs trim iSteelAsia losses