Google Finance: Gushan Environmental Energy Limited

Message from discussion Gu is a good buy right now this thing is going to $5 in the next 2 month

Wolf

More options Jun 20, 3:46 pm

From: Wolf <ccspagn...@hotmail.com>

Date: Sat, 20 Jun 2009 12:46:38 -0700 (PDT)

Local: Sat, Jun 20 2009 3:46 pm

Subject: Re: Gu is a good buy right now this thing is going to $5 in the next 2 month

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I'm long in this stock - and in the long run, optimistic that the
consumption tax will be ruled inappicable to biodiesel products - so I
don't want to cool any enthusiasm, but there are a few points here
that need clarifying. First, whether Gushan got a three-year tax
break from Fujian Province or not is irrelevant to the current issue,
as far as I know, since the consumption tax is imposed by the central
Chinese government and I doubt Fujian has unilateral authority to
waive it. The issue came up not because a three-year tax deal ended,
but - according to the news releases - because of new regulations
issued at the beginning of 2009 which appeared to make the consumption
tax applicable to biodiesel products.

Second, the consumption tax arguably does apply to Gushan's other
plants. For whatever reason, the local governments of the provinces
in which those plants are located have not attempted to collect from
Gushan to date. The press release Gushan issued does indicate that if
the consumption tax is levied against biodiesel products, it could
impact all of Gushan's plants.

Third, the Gushan plant may be only one of five, but the press release
indicated that it represents about 29% of Gushan's production
capacity. It would be hard to view this as likely to have only a
minor impact on their business while the situation is in place.

All that aside, you make some good points, Gofigure. In the current
economy and with the surplus of oil stocks, the company probably is
not running at full production anyways, which will help ameliorate the
loss of earnings while at the same time the company is minimizing
operational costs by keeping the plant idle. Oil should resume its
upward march at some point although it may be after a good lull due to
the surpluses and reduced usage. It is highly unlikely that China's
government will effectively kill the nation's biodiesel industry with
this consumption tax issue - they'll either "clarify" the tax is
inapplicable, or the price ceiling on biodiesel will be raised to
compensate. (And it should be raised soon anyway!) Furthermore, the
company has a great balance sheet, and has been well-run enough to
survive a literal tide of exceptional and unfortunate setbacks,
including the huge economic downturn; the interference of the Beijing
Olympics; and now this consumption tax issue. That means the
fundamentals are in place, and unless lightning is just going to keep
striking Gushan, in the long run we should see a great return on our
investments.

I'd be curious to know if anyone out there can speak to (1) how long
the central government is likely to take to address the consumption
tax issue and (2) how often the price-setting body revisits price
ceilings.

On Jun 20, 12:24 am, Gofigure <wangxi...@gmail.com> wrote:

> this is just one of their 5 production plants, there might be some
> business impact but I don't think this will be anything major, GU is
> supplying their current customers from other plant sites, and that
> actually should help reduce their overall operation cost - with the
> economy like this, I don't think GU is operating at even 70% total
> capacity currently. If China raises their diesel price by another 5 or
> 10% or gives biodiesel a special break, that will definitely get GU
> moving. In addition, I think GU is trying to get some tax deal with
> the local Fujian government, since that plant is still fairly new, and
> often there are local special tax breaks available. I bet they got 3-
> year tax-free (which is very typical in China for new investment) when
> they first started that plant in 2006 and now it is time to find way
> to continue that tax benefit, (and often they can, depending on their
> local government relation). Otherwise, GU should stop production at
> other sites as well, since the consumption tax was from the central
> government and should apply to products from all 5 sites.

> Anyway, I feel right now is a good opportunity to buy dip, though
> there is chance that GU might go to $1, (just like S&P may retest the
> March low), I'm buying GU for long term anyway, oil eventually will
> return to >80$ within 12 months, and GU should be > $4.5 at that time.
> 12 months with 100% return, I'll be very happy. :)

> On Jun 16, 10:04 pm, Wolf <ccspagn...@hotmail.com> wrote:

> > I think the stock continues to drop because the Fujian plant is
> > offline. Every day that plant is offline, Gushan loses potential
> > earnings. Plus, of course, China hasn't raised the price ceiling on
> > biodiesel enough, which on the one hand makes it more competitive with
> > raw product diesel, but on the other hand denies Gushan the
> > opportunity to maximise the profit it could take.

> > On Jun 16, 5:46 pm, yonil <silvatar_fl...@yahoo.com> wrote:

> > > don't worry about me, I've loaded up alright... I'm beginning to worry
> > > though. Seriously, oil hitting $70 and this thing continues to
> > > drop...I had the average below $2 but I added recently at $2.3x
> > > thinking it just couldn't possibly go lower with all the alt energy
> > > stocks soaring nowadays.. go figure. If it keeps going like that I may
> > > yet find myself with a net loss on this stock. well, all that's left
> > > is to hope for the best, GLTA.- Hide quoted text -

> > - Show quoted text -- Hide quoted text -

> - Show quoted text -

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