In past posts, a discussion about ” hitting ‘em where they ain’t” has been going on. Generally, as the economy and equities take hold once again, this is a solid perspective to consider for profit. There are, however, a few common realities to also consider. What is happening now on the ground, so-to-speak, cannot be ignored. China’s spending of its stimulus monies happens to be one of these realities. While the US and Europe are somewhat constrained by political issues, China is not. The Chinese government works quick and decisively. If it wants domestic spending for infrastructure development, it gets it moving now and not later. Those companies that are in the middle of this ability to act are the ones that will profit.

General Steel Holdings Inc., a specialty steel manufacturer, works to produce specialty steel products in the Peoples Republic of China. The company manufacturers products such as: hot-rolled carbon steel for shipping containers, infrastructure products such as construction ties, high speed cabling and spiral-wheel pipes. The company recently reported higher than expected earnings for the third quarter.

The company experienced a solid third-quarter, shipping approximately 1 million metric tons of product. With an estimate of $0.10 income per share the announcement of $0.22 per share was rather unexpected but reasonable given the commitment of the central government toward domestic consumption and infrastructure development. As a result, the company experienced a shipment volume increase of approximately 67%. Although the company is a joint venture, its primary participant is Long Steel Group, which should also be a consideration for investment. The overall group has a production capacity of 3 million tons of crude steel with Long Steel committing an estimated 80% of working assets to the venture.

Although pure conjecture, it does appear that the company is working with a particular favour from the central government as it goes about spending its stimulus money. This is a rather positive position to be in, considering government approval is key within the Chinese political system. In this regard, one must remember that the Chinese government has demonstrated that it is going to be fairly direct in the spending of funds and with haste. General Steel Holdings appears to be at the front of the line where Chinese spending is concerned. The company’s stock price may have surged in recent days but there does seem to be more room for movement.