[Another pick,] Gushan Environmental Energy (NYSE: GU) has had yet
another tough month on the stock market. A tax dispute with provincial
authorities continues to put pressure on Gushan’s biodiesel
production. As noted last month, Gushan Environmental Energy
temporarily suspended production at its Fujian refinery due to a
dispute with a local tax authority concerning consumption tax issues.
Consumption tax rates were to be levied on diesel products, which took
effect in January, but the company has stuck to its guns with the
State Administration of Taxation of Fujian, saying that its biodiesel,
which is produced from used cooking oil, vegetable oil, offal, and
jatropha oil, should not be subject to consumption taxes.

Resolution of the Fujian tax dispute and the reopening of Shanghai
Fujian will make an enormous difference to the future revenue and
profit picture for Gushan, the largest biodiesel producer in China.
The company is still 50% above our stop loss protector price and
remains in the buy column. We expect to hear more at the firm’s annual
general meeting in Hong Kong on November 18.

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