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China Precision Steel, Inc. Message Board

  • cabogordon cabogordon Oct 12, 2007 3:58 PM Flag


    The Q4 acquisition - I believe this is a done deal. GSI has simply chosen to consummate it at the end of 2007 so that they had plenty of time to bed-in the Longmen acquisition. Bear in mind that Longmen was 7 times as big as GSI's original business in terms of sales and profits, in other words GSI has swallowed an elephant. This east coast deal virtually doubles GSI's size again. That, plus Q3 earnings should certainly move the stock substantially. I'd guess it should be at or near $20 by year-end with decent Q3 results and the new acquisition announced. But yeah, on days when Nasdaq drops 70 points (that's about what it did y/day from peak to trough) GSI stock will suffer a bloody nose. That's the nature of investing, especially with fast moving stocks and this is one. Take a look at the stock performance this past year for GSI on - big big step-ups from time to time and after each one it seems to settle back a little. I see no reason why we will not have further big step-ups.

    Speaking about the long-term I would point out that even without the Q4 acquisition the company currently stands to earn $0.80 to $1.00 per share in 2008. That puts the stock on a 2008 p/e of 12-15. Very good value. Now layer-in the Q4 acquisition and EPS become about $2.29 for 2008. The stock, at $12 is extremely good value for the long-term. As I said in the article I believe the stock price will move forward in spurts from time to time when significant news comes into the public arena. The next two big events being; (1) Q3 earnings anouncement approx Nov 20 and (2) confirmation of the East Coast jv in the next several weeks.