General Steel Holdings Inc · OTC:GSIH
General Steel — Investor Presentation (August 2012)
23 slides from General Steel's investor presentation, Aug 10, 2012
Slide 1: Investor Presentation
1 1 Investor Presentation (NYSE: GSI) August 2012
Slide 2: Forward Looking Statements
2 Forward Looking Statements The material presented is a presentation of general background information about General Steel Holdings, Inc . as of the date of the presentation . The information is in summary form and it does not purport to be complete . It is not intended to be relied upon as advice
Slide 3: GSI's Value Proposition
3 GSI’s Value Proposition Strong financial performance: revenue CAGR of 85% (2005 - 2010) Executing on two - pronged growth strategy: organic growth and strategic M&A Poised to benefit from changing government regulation and industry consolidation, with demonstrated track record of successful acquis
Slide 4: Products & Customers
4 Products & Customers Sales Channel Breakdown in 1H11 Baotou - Xi’an railway, China The Three Gorges Dam, Sichuan, China Xi'an Xianyang Intl Airport, Shaanxi, China Representative Direct - Sales Projects Jiuquan Satellite project, Gansu, China Applications: Infrastructure and construction Applicati
Slide 5: Growth Strategy
5 Growth Strategy Capacity Expansion Organic Growth – new production lines Partnerships – access to third - party capacity Strategic acquisitions of steel producers Operational Efficiency Upgrade and replace outdated equipment to improve yields Installation of recycling systems reduces waste and ene
Slide 6: Expanding Production Capacity
6 Expanding Production Capacity ▪ New, state - of - the - art equipment reduces energy consumption and improves yields ▪ Unified Management Agreement to operate two 1,280 cubic meter blast furnaces and other equipment installed by Shaanxi Iron and Steel Group -- Equipment valued at approximately $55
Slide 7: Improved Operational Efficiency
7 Improved Operational Efficiency ▪ Replaced older, inefficient blast furnaces with new, state - of - the - art equipment to reduce energy consumption and improve yields at Longmen Joint Venture ▪ Reallocation of equipment to improve efficiency ▪ Installed new recycling and environmental systems to
Slide 8: Optimizing Raw Materials Sourcing
8 Optimizing Raw Materials Sourcing • Mulonggou is owned by Longmen Joint Venture ； • Daxigou is owned by Long Steel Group, GSI’s partner in Longmen Joint Venture Current Raw Materials Procurement: Cost Advantage Iron Ore ▪ 50% imported ▪ 35% domestic ▪ 15% from Daxigou mine and Mulonggou owned by L
Slide 9: Growth Through Strategic M&A
9 Growth Through Strategic M&A Scenario A: Acquire Manufacturing Capacity ▪ Continue industry consolidation through strategic acquisitions of steel producers ▪ Targets include both State - Owned Enterprises and privately - owned facilities ▪ Focus on facilities that meet the government’s stringent e
Slide 10: Industry Overview
10 Industry Overview Infrastructure and housing investment driving sustainable demand for steel in Western China China Crude Steel Output - Monthly January 2008~December 2011 2011 steel production in China was a record 695.5 million metric tons (45.5% of global output) -20% -10% 0% 10% 20% 30% 40% 5
Slide 11: Strong Catalysts for Industry Consolidation
11 ▪ Central government initiatives aimed at improving industry efficiency through national consolidation effort ▪ Smaller, less efficient mills are being targeted for shutdown or acquisition ▪ Limitations on new capacity development force larger steel producers to increase capacity through acquisit
Slide 12: Operational Philosophy Supports Industry Consolidation
12 Operational Philosophy Supports Industry Consolidation ▪ Provides comprehensive solution to the government plan for industry consolidation ▪ Acquires or forms JVs with SOEs and non - state - owned companies ▪ Retains existing management through stock incentive plans ▪ Improves profitability via w
Slide 13: Subsidiary Locations
13 Subsidiary Locations M G T Baotou Steel - General Steel Special Steel Pipe JV Co., Ltd. 80% owned / Capacity: 100,000 mts End product: spiral - weld Pipe Tianwu General Steel Material Trading Co., Ltd. 60% owned / C apacity: 2 - 3 million mts Raw Materials Trading Company General Steel (China) Co
Slide 14: Geographic Advantage
14 » GSI’s subsidiary, Longmen Joint Venture is the dominant supplier of rebar in Shaanxi province with 7 million metric tons of capacity under management Source: National Bureau of Statistics of China,, Shaanxi Bureau of Statistics of China, http://www.sn.stats.gov.cn/news/tjsj/2012723130434.htm ,h
Slide 15: Longmen Joint Venture
15 ▪ Fully - integrated operation enables cost - efficient production ▪ 60% ownership interest - acquired stake for US $39M in June 2007 ▪ Approximately 70% market share in Shaanxi province ▪ Limited regional competition ▪ 15% corporate tax rate, incentivized through “Go West” tax policies ▪ 7 milli
Slide 16: Longmen Joint Venture Unified Management Agreement Timeline
16 Longmen Joint Venture Unified Management Agreement Timeline Key Implications x Unified Management Agreement Signing Ceremony April 29, 2011 x Commencement of Equipment Testing Apr 2011 x Full - scale Production May 2011 Jun 2009 x Completion of Equipment Testing Jan 2011 * Shaanxi Coal Group is t
Slide 17: Longmen Joint Venture is the Principal Management Party
17 Longmen Joint Venture is the Principal Management Party ▪ Fully funded construction of new equipment at Longmen Joint Venture, with fair market value of $550 million ▪ Two 1,280 cubic meter blast furnaces, two 120 metric ton converters and one 400 square meter sintering machine ▪ New equipment ad
Slide 18: Second Quarter 2011 Highlights
18 Second Quarter 2011 Highlights Growth Driver: Capacity Expansion & Increase in ASP Capacity Expansion at Longmen Joint Venture ▪ Signed a 20 - year Unified Management Agreement with Shaanxi Coal and Shaanxi Steel ▪ New equipment adds 3 million metric tons of crude steel production capacity annual
Slide 19: Financial Highlights
19 Financial Highlights 2010 2009 YoY Six Months Ended 6/30/11 (Unaudited) Six Months Ended 6/30/10 YoY Shipment Volume (kmt) 3,955 3,834 3.2% 3,000 2,000 N/A Total Revenues $1.9 billion $1.7 billion 13% $2 billion $1 billion 84% Gross Profit $72 million $89 million (18.8%) $56 million $13 million N
Slide 20: Growing Revenue Amid Capacity Expansion
20 0.3 1.9 2.3 3.8 4.0 5.0 5.5 0 1 2 3 4 5 6 2006 2007 2008 2009 2010 2011 139.5 772.4 1351.2 1668.4 1893.6 3000.0 3600.0 0 500 1000 1500 2000 2500 3000 3500 4000 2006 2007 2008 2009 2010 2011 Metric Tons (mm) Production Volume Growth US$(mm) Growing Revenue Amid Capacity Expansion Revenue Growth *2
Slide 21: Management and Directors
21 Name Title Experience Zuosheng (Henry) Yu CEO & Chairman ▪ Founded the Company in 1988 ▪ Bachelor’s degree from Sciences and Engineering Institute, Tianjin, China ▪ Granted “Senior Economist” by the Committee of Science and Technology of Tianjin City ▪ Member of China’s APEC (Asia Pacific Economi
Slide 22: Key Takeaways
22 Key Takeaways x Unified Management Agreement with Shaanxi Steel Group and Shaanxi Coal Group provides multiple benefits x Poised to benefit from changing government policy and industry consolidation x Proven management team with extensive industry experience and relationships x Steel industry lea
Slide 23: Thank You!
23 23 Thank You! Jenny Wang Brandi Floberg / Lee Roth General Steel Holdings, Inc. The Piacente Group Tel: + 86 - 10 - 5775 - 7691 212 - 481 - 2050 Email: jenny.wang@gshi - steel.com Email: generalsteel@tpg - ir.com
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