Dutton Associates Announces Investment Opinion: General Steel Holdings Price Target Raised in Update Coverage by Dutton Associates

Business Wire, Sept 9, 2008

ROSEVILLE, Calif. -- Dutton Associates updates its coverage of General Steel Holdings (NYSE: GSI) with a Speculative Buy rating and a price target of $16.11. The 12-page report by Dutton senior analyst Stanley Ng is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals.

General Steel recently announced its financial 2Q results ended June 30. Even though revenue and gross margins at Daqiuzhuang Metal and Baotou Steel Pipes were a bit disappointing, the higher-than-expected revenue and visible recovery in gross margin at Longmen Joint Venture (Longmen JV) helped offset the negative impact of the weak performances at the other two subsidiaries. The non-GAAP diluted EPS of $0.13, which excluded the negative impact of change in fair value of derivative liabilities, was marginally below our forecast of $0.14. Looking ahead, we see several positive factors that will be able to propel revenue and net income growth for the remaining two quarters in 2008 and in 2009. The most positive factor that prompts us to significantly revise upward our revenue and net income forecasts beginning in 3Q08 is the construction of two new blast furnaces at Longmen JV, which will increase total annual production capacity from 2.5 million to over 4.0 million tons in 2009. Additionally, the newly acquired Maoming Hengda Steel will start producing high-speed wires in 3Q08 to serve the construction and infrastructure industry in the Southern China region. We expect General Steel to achieve 2008 revenue of $1,715 million, up 122%, and rise 61% to $2,765 million in 2009. Net income on non-GAAP basis will jump 52% to $24.8 million in 2008 and surge 171% to $67.3 million in 2009. Diluted EPS on non-GAAP basis are estimated at $0.71 for 2008 and $1.79 for 2009.

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Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts are primarily CFAs, and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.

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