WSP Holdings (NYSE:WH)

It's in a good spot making pipes a drilling bits and it's in China. Room to grow I'd hope.

This steel maker just can't seem to get it right.

The 19% tarriff -- ahem... anti-dumping duty -- on steel tube products from China has absolutely destroyed this company's sales, which have been halved. Right now, the fumes the company is running make it seem that the company is flirting with insolvency. To judge from 2010 Q3 figures, it would seem that the cash burn will create a liquidity problem in the near future. This makes those share buybacks and dividends from 2009 look quite ill-advised. WH was not listed as an offender by Commerce though and the main problems appear to be the surplus of API pipe domestically from the loss of the $100M export market to the US. I am going to speculate though that the real decline here is the general economic slowdown that followed the collapse in the debt markets. The uptick for the future may not happen from US or Chinese sales, but rather from sales to Russia and Venezuela. My personal feeling is that Chinese companies have certain geopolitical advantages in many jurisdictions -- Brazil, Venezuela, and Russia -- that US companies do not. It appears that the company is focused on exactly these markets.

under priced

strong buy

Will pick up next yr., but for now, not much promise.

bottom fishing today speculation play

There's a high enough chance that this company is greatly undervalued that I own it in RL

hoping for a dividend in april

Interesting story. Most ratios and estimates of this stock look good. I think 3/8 it will post better than expected loss and next year will bloom

cheap

Great value play here. Would look good in any portfolio.

in third quater company has the only loss and its increasing its market share by opening new plants. good cash flow

WSP Holdings is a solid company that has been facing some problems as of late.

Their Q3 2009 earnings report was highly disappointing with a report of earnings of -0.19/share. However, this was their first quarter ever reporting a loss and was largely related to political policies.

During Q3 the United States imposed tariffs and anti-dumping laws on Chinese imports and OTCG goods. This cut into WSP Holding's revenues rather deeply because of other OTCG companies retreating from the US and falling back on domestic sales back in China. This resulted in an oversupply of OTCG products in China which cut into WSP's revenues because a majority of their revenue comes from domestic sales.

However, soon after the Q3 report the US announced a cut on the anti-dumping tariffs somewhere around the tune of 13.1% down from 23.2%. This should help with the oversupply in China and have a somewhat restorative effect on WSP's domestic sales over time. WSP has stated that domestic sales should improve in the second half of 2009, so perhaps Q4 will see improvement.

WSP has been expanding their 'Houston group' operation which is their US locale located in Houston, TX. The Houston group just came online in Q3 with 1 production line currently active and will have 1 threading line active in Q1 2010 with a capacity of 120,000 tpa annually. Currently, the US is only a small part of WSP's revenues, but Houston group will change this and as it continues to come online their revenue from the US will increase.

WSP announced a $10 million share buyback the day after Q3 earnings report which can be interpreted as a positive sign. WSP holdings even stated they believe the current share price is heavily suppressed. With ~102 million shares outstanding WSP's current book value is approximately $4.18, which means it is currently at ~0.77 of book value. The current dividend is about 10-30% of earnings and is issued annually, the company has stated they wish to keep this dividend in effect even for this year, but has not officially announced it as of yet.

This company has about ~$500 million in debt, but has over $83 million in cash, $250 million in restricted cash, and over $225 million in A/R.

More good news is that recently CNPC received a large deal to develop oil fields in southern Iraq and Venezuela. (Source: http://online.wsj.com/article/SB126152693744102097.html?mod=googlenews_wsj )
This is great news for WSP because as they state on their website: "We are an important OCTG supplier to China National Petroleum Corporation, CNPC, China's largest oil company." As an important supplier to CNPC, WSP's domestic sales should begin to recover more quickly than previously expected by WSP as CNPC begins to move out and develop these oil fields.

If Q4 earnings are positive or even a considerable improvement over Q3 earnings WSP's share price should experience a healthy boost.

I think WSP's prospects are good, but it may experience a slightly bumpy ride in the short to mid-term pending earning results. The CNPC deal will help this company. If you can be patient through the first half of 2010 I beleive this stock will pay off. Now is a good time to buy, or anywhere in the low 3's or high 2's (If it ever hits the high 2's again.)

Depressed stock price due to US trade barriers and resulting oversupply in China.

Steel - No

Liked this one enough to buy in real life.

WH has been punished (and rightly so) for missing earnings. As a result of US Steel Industry antidumping case, exports to the US have all but ceased (and will probably stay that way in the short-term. Excess supply in china lead to a 46% decline in domestic sales.

With ~80mm in unrestricted cash available. Management should be able to take advantage of board approved 30mm Buyback and pay .30 annual div (10%). Income and med-term notes will cover planned CAPEX.

I expect WH will be a bit volatile over the next quarter or so, but in the medium-term institutional holders will return and so will the stock price.

i suck. don't ever listen to me. never buyin' china again. but give it a year, ok? and if you must buy, do it now.