SUTR - Sector: Basic Materials---Industry: Iron & Steel

[kslifka]

I like this chart and fundamentals of this small China Steel company.

Nice volume after earnings report several days ago.

[kslifka]

Nice little break-out today.

I will probably take profits today.    this market is just relentless.

[vivaviagra]

 
Chinese stocks are starting to rally again. This is a ground floor opportunity for major short and long-term gains.

12-mo Target: $16 - $20


SUTR announced a new expansion this month that will increase revenues by 60% and increase net income to over %1/share in 2009 from about 70c/share in 2008.

Over 90% of SUTR's output is consumed in China. The 2010 Shanghai World Expo will be a major boost for SUTR located a short distance from Shanghai.

...SUTR's Top 10 Investment Features:

1.  LOW PE....70c/share net income for 2008...52c/share for first 9 months. Over $1/share expected for 2009.

2.  STRONG REVENUE GROWTH. Revenues are growing at over 40% Q/Q and Y/Y

3.  CONSISTENTLY EXCEEDS ANALYST EXPECTATIONS. SUTR has exceeded expectations of a Roth Capital analyst each of the last 3 quarters

4.  NEW EXPANSION. A significant expansion has been announced recently that will increase revenues by as much as $340M/year or twice the current market cap. Net income will jump to $1+/share in 2009 from 70c/share in 2008

5.  STRONG MARKETS. Over 90% of its production output is consumed in China...Therefore, SUTR is unaffected by the US meltdown.

On March 12, Lehman Brothers analyst Dana Guido stated:

"We estimate that the recent steel price hikes will more than offset higher raw material costs for steel producers, and we expect strong second quarter results for our steel universe," she wrote in a client note.

6.  TECHNOLOGY LEADER. SUTR is the only company in China that produces anti-static steel for specialty applications like clean rooms, hospital rooms, tec. SUTR has dut the ribbon on a new 50,000 sq. ft. R&D building in March, 2008

7.  LESS DEPENDENT ON IRON ORE PRICES. SUTR is a specialty steel manufacturer and therefore it commands higher margins than raw steel producers.

8. MORE TRANSPARENCY. Unlike many Chinese and foreign companies, SUTR is not listed as an offshore company and therefore it files 10Qs and 10Ks to provide more transparency.

9.  STRONG MANAGEMENT COMMITMENT. Chairman Lifang Chen sold 2,000,000 shares in a private sale in December, 2007. She then let the company borrow the $7.1M proceeds to fuel the company growth and to prevent dilution (source: latest 10Q)

10.  LOW FLOAT. Chairman Chen and her husband own 31M out of the 38M outstanding shares. The float therefore is only 7M shares

11.  VIRTUALLY UNKNOWN...BUT NOT FOR LONG. SUTR began trading on the NASDAQ market in February 2008. This is the main reason why SUTR is still under the radar. SUTR is starting to get noticed however. Last month SUTR was not even rated by Motley Fool CAPS. Since then it added stars every single week and now it's rated the maximum 5 stars.

OTHER HIGHLIGHTS:

On February 14, 2008, SUTR's 2Q 2008 exceeded all expectations...its first NASDAQ earnings report:

- Net income $6.7M, or 18c/share, up from $4.5M in the same period a year earlier.

- Revenues $114.9M from $78.6M in the same period last year.

- In a Feb. 15 report, analysts at Roth Capital Partners were bullish on the steel product maker's future, noting:

.."We anticipate incremental revenue contribution starting Q1 FY09. We expect HDG capacity will double by December 2008, which will increase total capacity by 30%+, to 1.7 million tons."

..."we believe the company is planning to add additional lines, which could provide upside to our FY 09 estimates. With increasing capacity and strong pricing trends, we expect a 3-year revenue growth CAGR of 19% and gross margin expansion to 11.9% by the end of FY09 from 9.9% this quarter."

- China's economy grew 11.4% in 2007, the fastest in 13 years, and that type of growth requires an enormous amount of raw materials to fuel the country's rapid industrialization and urbanization. In fact, China now consumes roughly 50% of the world's cement, about 25% of all aluminum and copper and nearly 40% of the steel supply.

[vivaviagra]

Largest shareholder Chairman Lifang Chen sold 2,000,000 on 12/14/2007 in a private sale and she lent the proceeds to the company to fuel growth and avoid dilution according to the most recent 10Q.

This is from the 10Q

..."On December 20, 2007, Ms. Lifang Chen loaned $7,100,000 out of the proceeds that she received from her private resale of her 2,000,000 shares of our common stock on December 14, 2007 to our subsidiary Sutor Steel Technology Co., Ltd., or Sutor BVI, for our working capital needs. The annual interest rate for the loan was 5%. The loan has a two-year term. For additional information regarding the private sale of common stock by Ms. Chen and the related transaction agreements, please see our current report on Form 8-K filed on December 18, 2007 and the exhibit attached thereto..."

How many US CEOs/Execs do that? ...Hmmmm..I can't think of any

Ms Lifang Chen having decided to reinvest the proceeds of the 2,000,000 share sale in the company tells me that she is confident about the future of the company and expects the pps to go much higher in the future

[vivaviagra]

I suggest that you familiarize yourself with SUTR. You will see that symbol on the CNBC ticker with a large gain...real soon.

Here is the latest company presentation:

http://www.sutorcn.com/System/HtmlEdit/UploadFile/2007112911033600.pdf

[vivaviagra]

SUTR's brass at the opening of Nasdaq trading on 2/11/2008. The day it started trading in Nasdaq

http://www.nasdaq.com/reference/200802/market_open_021108.stm

[vivaviagra]

Take a look at Roth Capital analyst projections. SUTR has beat estimates the previous 3 quarters in a row

http://finance.yahoo.com/q/ae?s=SUTR

[vivaviagra]

Recent view on SUTR:

http://www.smallcapinvestor.com/articles/03062008-check_on_china_sutor_technology_group

[vivaviagra]

SUTR at under $4 is NASDAQ's best value. Do your DD before another blockbuster earnings will send it flying well past $8

[vivaviagra]

3/8/2008..SUTR OPENS NEW 5000 SQ METER HIGH PERFORMANCE RESEARCH R&D CENTER

The center will house up to 100 personnel that will work on developing new processes to differentiate SUTR from the competition. Value-added products like its new antistatic steel process....the only one in China... will yield higher margin products and open new markets.

http://www.cshuaye.com/New.asp?Id=88 

[vivaviagra]

SUTR Only Source of Antistatic Steel in China

SUTR recently announced the launch of its newly developed antistatic color coating technology for its new product -- antistatic color coating steel strips --

The antistatic coating technology makes SUTR the sole producer of this product in China. Before Sutor's development of the antistatic color coating technology, Chinese consumption relied solely on imported products.

These products will be used to build production rooms for precision manufacturing devices, such as semiconductors, PC shells, operation rooms in hospitals,laboratories, etc., which require a static-free environment.

The new products have achieved great market feedback. Sutor believes its sales will increase rapidly along with the market awareness.

Ms. Lifang Chen, the Chairman of Sutor said delightedly, "It is a great achievement for our company, which increases our product pool selection, enhances our market position and proves our R&D ability once again. I want to thank our R&D staff for their hard work, and I believe our company will develop more
value-added products in the future." 

[vivaviagra]

SUTR NEWS....JEFFREY H. SINGER, NASDAQ SR VP VISITS SUTR 3/20/2008   

The tall guy in the middle is Nasdaq's Sr VP Jeffrey H. Singer, next to him is Chairman Chen

http://www.cshuaye.com/New.asp?Id=90

The Chinese PR basically says that Mr. Singer upon his visit of SUTR's facilities and after meeting with company officials made the following remarks:

1) SUTR is an inportant NASDAQ customer...that SUTR has a formidable potential and strenght as as a high growth enterprise..

2) Mr Singer was very impressed with the vertical growth initiatives. That with the effective cost control that the company is implementing it will enhance the company profit margin.

3) Mr. Singer was very impressed with the high-quality steel processing equipment and technology the company uses. He feels that SUTR will become a flagship enterprise in the steel industry.

4) SUTR has established the good enterprise image in the US investment market.

5) Nasdaq will continue to support the company's growth initiatives

6) NASDAQ wishes to enjoy a long-term strategy and partnership with the company


You could use Altavista Bablefish for free online translation 

[vivaviagra]

SUTR up on News Today....Significant Capacity Increase

Sutor to Produce New Hot-Dipped Galvanized Steel and to Plan New Annealing/Degreasing Production Lines
Tuesday March 25, 8:00 am ET

CHANGSHU, China, March 25 /Xinhua-PRNewswire/ -- Sutor Technology Group Limited ("Sutor" or the "Company") (Nasdaq: SUTR - News), a leading provider of steel finishing fabrication products in China, announced today its plans to commence operation and production of its new zinc and aluminum hot-dipped galvanization ("HDG") system in the third quarter of calendar year 2008 (first quarter of the Company's 2009 fiscal year), and to initiate construction of new annealing and degreasing production lines in 2008, which are expected to become operational in the second quarter of calendar year 2009 (fourth quarter of the Company's 2009 fiscal year).


Construction of New HDG System

In August 2007, Sutor commenced construction of its new HDG system. Our construction process for the HDG system involves three stages: procurement, commissioning and final assembly/optimization. During the procurement stage, we evaluate and select appropriate component and equipment vendors; during commissioning, we conduct extensive on-site qualification testing, verification and optimization with our components, subsystems and equipment vendors and in the final stage, we complete assembly, final testing and optimization.

Currently, our new HDG system is still in the commissioning stage, which is designed to ensure the system's future stability and reliability of production, as well as efficient integration for final assembly. Our original construction design only included one galvanizing pot for the HDG specifications. However, based on the customer demand assessment and future operation cost considerations, we decided to re-design this new system within the commissioning stage to include two galvanizing pots for improved flexibility, enhanced reliability and reduced down time for cost savings. Accordingly, we extended the commissioning period for the addition of the extra galvanizing pot, which we believe will optimize our new HDG system.

Once completed, our new system is expected to provide 400,000 additional metric tons of annual capacity to our existing 200,000 metric ton HDG line, resulting in a total of 600,000 metric tons of annual capacity. Our new system affords us new advanced production capabilities using hot-dipped galvanizing methodology for both hot-rolled and cold-rolled steels, compared to our existing line, which is only capable of hot-dipped galvanizing of cold- rolled steel. Additionally, the new system can galvanize both zinc and aluminum coatings, compared to the existing line which can only galvanize zinc coating. The aluminum coatings have different applications than the zinc coatings, and can further meet the customers' specification requirements. We expect our improved production technology will make us more competitive and enhance our business prospects.
Planning of New Annealing/Degreasing Production Lines

As the new HDG system nears completion, Sutor is also planning to expand its annealing and degreasing capabilities. The annealing facilities which induce ductility, relieve internal stresses, and refine and improve the structure and the properties of the cold-rolled steel for expanded steel applications and the degreasing line which is designed as a surfacing cleaning process in preparation for annealing and for quality compliance of the cold- rolled products expand and diversify our production capacities and enhance product quality.

The new annealing and the degreasing lines are expected to have annual capacity of 300,000 metric tons each and commence mass production in the second quarter of calendar year 2009 (the fourth quarter of the Company's 2009 fiscal year).

Ms. Lifang Chen, Chairperson of Sutor, commented, "I am pleased to announce the continuation of our vertical integration growth strategy. Our new and advanced HDG system will successfully expand our production capacity helping us to better meet our customer demands. In addition, I am very excited to be commencing the construction of our new annealing/degreasing lines which will further diversify our product portfolio, expand our market applications, improve our value proposition to our customers, mitigate our supply chain and quality sourcing risks, as well as expand our revenue base for the future."

[vivaviagra]

Interesting Article on the massive growth expected for steel companies this year and in the next 5 - 20 years:

http://seekingalpha.com/article/69714-a-bull-made-of-steel?source=side_bar_long_ideas


While X, NUE, and others listed on the article have enjoyed strong gains thanks to recent upgrades, SUTR is still trading at a PE of less than 6. X, NUE, and the other companies in the list have PEs from 14 to over 20.

There is a lot of upside for SUTR based on valuation alone. If you factor the growth rate, SUTR should be trading well above $15

[vivaviagra]

SUTR is on fire!!!