Henry Yu, CEO and Chairman of General Steel said, "Both of these subsidiaries will contribute positively to our earnings growth. We are happy to be enhancing the integration and efficiencies of our operation and at the same time expanding our relationship with our strategic partner, the Shaanxi Longmen Group. This is another affirming step on our way to becoming one of the largest non-government steel companies in China."

Our Feature Profile:

General Steel Holdings, Inc.
(OTC BB: GSHO)
Close of September 26, 2007: $7.00

Company Profile

General Steel Holdings, Inc. (GSHO), headquartered in Beijing, operates a diverse portfolio of Chinese steel companies. With 3 million tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including reinforced bar (rebar), hot-rolled carbon and silicon sheet and spiral-weld pipe. The company has steel operations in Shaanxi province (central China), Inner Mongolia province (northwest China) and Tianjin municipality (northeast China). For more information, visit http://www.gshi-steel.com

Mission Statement:

Our mission is to acquire government owned steel companies, and increase their profitability and efficiencies with the infusion of applied western management practices, advanced production technologies and capital resources. Our investment strategy is to actively participate in the privatization of state-owned steel companies in China. We aim to acquire assets from large state-owned enterprises at attractive prices, by leveraging our relationship with certain key people and local governments. Our controlling interest positions in Joint Ventures with the Baotou Steel Group and the Shaanxi Longmen Steel Group is evidence of this strategy. We are actively seeking additional assets to acquire.

At present, the company has controlling interest in three companies for their portfolio of assets. All three companies are exceptional and operate in selected niche markets.

• Shaanxi Longmen Steel
• Tianjian Daqiuzhuang Metal Sheet Co., Ltd. (DQ)
• Baotou Steel – General Steel Special Steel Joint Venture Co., Ltd. (SSJV)

China & Steel:

World steel demand has increased steadily since 1999, but this increase has been accelerating since 2002 and represents around 50 million tons more per year. In 2003, world steel consumption increased by 6.6% compared to 2002, and further increases by 6% in 2004 and 5% in 2005 are expected. This strong surge in steel consumption is the result of the dramatic acceleration of domestic steel demand in China where steel consumption that had been growing by an average 2.6% a year over the period 1995 to 2000 has increased by some 25% a year since 2001 and is expected to continue to grow at a very rapid pace also in 2004 and 2005. In comparison, steel consumption in the rest of the world declined by 4.2% in 2001 and since then has grown at an annual rate of 2.1%. In the OECD area, steel consumption declined by 0.5% in 2003 compared to 2002, reflecting an 8.9% decrease in North America that offset a 2.6% increase in Europe and a 4.5% increase in the Asian-Pacific area.

China steel imports in 2003 jumped by 48.0% over the 2002 level and reached an unprecedented 43.0 million tons. In 2004, world steel trade is expected to increase, by a further 1.2%. As a result of growing demand, Chinese steel imports should remain at the very high level reached in 2003 and could even increase slightly.

World crude steel production followed the same developments as consumption and reached a new record level of 964 million tons. In 2004, for the first time in history steel production is expected to pass the 1 billion tons level and should reach 1 016 million tons, a 5.3% increase over 2003. This trend will continue in 2005 when production could reach 1 065 million tons. As with consumption, this is mainly the result of the very rapid expansion of steel production in China. Steel production in China increased by 93 million tons between 2000 and 2003, at an annual growth rate of 20%. In the rest of the world, crude steel production decreased by 3% in 2001 and since then increased at an annual rate of 3.2%.

Carbon Steel:

The Company produces hot rolled carbon and silicon steel sheets. The sheet sizes are approximately 3000 mm (width) x 2000 mm (length) x 0.75 to 2.0 mm (thickness). Limited size adjustments are possible to meet order requirements. "Qiu Steel? is the registered name for company's products. The company logo has been registered with the China National Trademark Bureau: No. 586433. "Qiu Steel? is registered under the GB 912-89 national quality standard, and certified under the National Quality Assurance program. The Company was awarded the "Good Quality Product" award by the Tianjin Products Technical Quality Assurance Bureau in 2001, and the "Famous Trade Mark" award by the Tianjin Commerce Bureau in 2002.

In 2003, the Company invested four million RMB ($500,000 USD) to build two new production lines capable of producing silicon steel sheets. Silicon steel sheets have a higher profit margin than carbon steel sheets. Each production line can produce 40,000 tons annually. The Company sells silicon steel sheets to customers in the electrical machine and appliances manufacturing industries. From 2002 to 2003, overall Company production increased by XX%: from XX tons in 2002, to XX tons in 2003 Management is strategically transforming Qiu Steel?toward the increased production of higher margin products to diversify its customer base.

Research Reports:

• July 2007 -- Montgomery Street Research Initial Analyst Report on GSHO - July 2007.pdf
• September 2007 -- Brean Murray Carret Conference Presentation Sept 10 v_1.pdf

Business Summary:

General Steel Holdings, Inc., through its subsidiaries, conducts steel operations in various parts of China, including Shaanxi province, Inner Mongolia autonomous region, and Tianjin municipality. It produces various steel products, including reinforced bar, hot-rolled carbon and silicon sheet, and spiral-weld pipe. Its semi-finished hot-rolled carbon and silicon steel sheets are used in the manufacture of tractors, agricultural vehicles, shipping containers, and in other specialty markets. The company sells its products primarily to distributors, service centers, and manufacturers of agricultural vehicles through retailers and wholesalers. General Steel Holdings was founded in 1988 and is headquartered in Beijing, the People's Republic of China.

Key Management:

• Mr. Zuo Sheng Yu, Chairman, Chief Executive Officer and President
• Mr. John Chen, Chief Financial Officer, Principal Accounting Officer
• Mr. Yu Wen Liu, Manager of Sales & Purchase Department
• Mr. Xiao Gang Su, Manager of the Human Resources Department
• Mr. Wen Chun Han, Controller

SEC Filings:

Edgar search results for all of General Steel Holdings, Inc.'s recent SEC filings can be found at: http://finance.yahoo.com/q/sec?s=GSI

Key Statistics:

Contact Information:

Technical Analysis

Many China stocks are exploding to the upside and are cited to have robust growth potential in 2007. We find the trading activity for GSHO to be no different. The stock surged from $4 to almost $9 within a week of trading and on explosive volume. The pullback over the last three months was expected, and it was on much lighter volume (just profit-takers). Currently the stock is trading in an upward trending channel and very poised for price appreciation. We expect to see another one or two powerful surges to the upside like the stock experienced in February 2006. If this happens, GSHO could produce returns well over +20% in a few days. The stock currently trades at $7.00. We assign a one month target price of $9 (+50% profit).

Conclusion

Technical analysis and solid company fundamentals unfold an exciting future for GSHO. As evidenced through acquisitions and privatization of government owned steel companies in China like Baotou Steel Group and the Shaanxi Longmen Steel Group, this will undoubtably increase the growth potential of the company. We strongly believe that GSHO has an outstanding future and should be a superb long-term investment. We believe investors will be rewarded handsomely by a much higher stock price if the company can meet its objectives and fulfill its mission.

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