Aggressive steel play, China.

Bottom Fishing

Moves with predictability and the market.

Buy - Price 14.76 on July 1
by Merriman Curhan Ford

GSI acquired Maoming Hengda Steel Group...located in Maoming City, Guangdong Province, in China's southern coastal region near Shenzhen and Guangzhou. Hengda has around 1.8 million tons of production capacity, bringing GSI's...total capacity to around 4.8 million tons. GSI believes it can ramp up capacity at Hengda to around 47% by [the] calendar year end, from the current 10% to 15% and continue the ramp in 2009, suggesting strong demand for wire and rebar in this province. We believe the valuation for Hengda Steel seems cheap at $7.1 million, given the current equity or book value of around $11 million....we're lowering our FY08 EPS estimate to 65 cents from 89 cents (we project very little impact this year from the Hengda Steel acquisition). We are raising our FY09 EPS estimate to $1.50, as lower gross-margin assumptions for GSI's core business are more than offset by the ramp in volume and profits at Hengda Steel. Estimated fiscal-year 2009 price/earnings ratio: 7.5 times. Market cap: $512 million.

Nice commodity play

From a recent Mad Money show:

"I've looked at it and I like it. I like United States Steel (X) and Reliance Steel (RS) and I think you should buy them all on any weakness."

wildcat

great chinese steel co with explosive earnings

China growth

"RS Funds isn't allowed to publish price targets, but Thacker says her fund's general goal is to double the value of its investments. GSI shares were trading around 24.71 last Thursday."