stock pitch

FUSHI COPPERWELD (NASDAQ: FSIN)VALUE PITCH

F. Batten Fund

Yinhan ZhangNovember 1, 2010

Agenda

•Company Background

•Business Opportunities

•Financials

•Valuation

•Conclusion

Company Background

Line of Business• “One of the world’s largest producers and a

leading innovator of bimetallic wire products, principally copper-clad aluminum and copper-clad steel…”

– Company 10K• Services telecommunication, utilities,

transportation, auto, etc.• Copper-Clad Aluminum (CCA)▫ 37-41% density, >63% IACS (International Annealed Copper

Standard)

• Copper-Clad Steel (CCS)• 21%, 30%, 40% IACS

LeadershipFu, Li (Age 44) Chairman of the Board and Co-Chief Executive

Officer since November 2009. He has served as Chairman of the Board, Chief Executive Officer since December 13, 2005. Mr. Fu is a founder of Dalian Fushi and has been the Chief Executive Officer since the Company commenced operations in 2001. Mr. Fu graduated from the PLA University of Science and Technology with a degree in Engineering.

Longever, Joseph (Age 57) serves as Co-Chief Executive Officer since November 23, 2009. Prior to Fushi, he ran an independent consulting service which he founded in 2007. From 1999 to 2007 he held various Senior Management, Sales, Marketing and operations within Copperweld, including Vice President and Chief Operations Officer. He has also served as Executive Vice President and General Manager at Crest Manufacturing Company; and held sales roles at Texas Instruments.

LeadershipWang, Wenbing (Age 38) is President, Director or since January

21, 2008. He also served as Chief Financial Officer from December 2005 to August 2009. Prior to Fushi, Mr. Wang worked for Redwood Capital, Inc., China Century Investment Corporation, Credit Suisse First Boston and VCChina in various capacities. Fluent in both English and Chinese, Mr. Wang holds an MBA in Finance and Corporate Accounting from Simon Business School of University of Rochester. Mr. Wang also currently serves as a director of General Steel Holdings ,China Integrated Energy, Inc., and Orient Paper, Inc.

Studwell, Craig (Age 62) is Chief Financial Officer, Executive Vice President since October 19, 2010. He brings 35 years of experience in banking and corporate finance in the United States, Asia, and Europe. Mr. Studwell holds a Bachelor of Science Degree in Finance from New York University.

Geographic and Product SegmentSALES BY INDUSTRY TOTAL SALES 2009

Telecommunication 50% Utility 44% Transportation 1.7% Other 3.4%

SALES BY GLOBAL DISTRIBUTION TOTAL SALES 2009 CHINA 80% US 16% EUROPE 3% OTHER 1% Source: Company 10K

Manufacturing Capacity<= Dalian, China<= Fayetteville, TN<= Telford, U.K.

Recent Acquisitions2009 2008

Significant Developments• Jan 21, 2010- Acquired Dalian Jinchuan

Eletrical Cable Co., a manufacturer of electric wire and cables in Northeastern China for $10 million.

• Feb 1, 2010- issued 7,475,000 shares of common stock at $8.00 per share. Received $56.4 million net of underwriting discounts.

• May 27, 2010- Purchased Shanghai Hongtai, a bimetallic wire manufacturer (CCA, CCAM) for $3.9 million ~ $1.3 million in cash and $2.6 million in restricted stock.

Business Opportunities

Opportunities• China

▫ Growth in Chinese telecommunication industry offers solid opportunities for growth.

▫ Penetration rate: China- 59.6% vs. US- 91.0% as of June 2010 • Strategic expansion through acquisitions

▫ Jianchuan acquisition ventures into Chinese cable industry.▫ Hontai acquisition expands sales and distribution network to

Southeast China. • Economic recovery • Copper price upswing

Raw materials

Copper 53%Aluminum 41%Steel 6%Total 100% ==>85% CGS

•Prices NOT hedged•Suppliers are concentrated

▫Top 5~ 65% (2008) vs. ~ 60% (2009)

Price of Raw Materials

LME Copper Price Graph (US$/metric tonne)

Revenue and Cost

Global Economic Recovery – Copper Price Rebound

The “Triple Play”

The economy

Price of copper

FSIN’s performan

ce

Recovery

Negatives Positives

Higher demand for substitutes

Market growth

Higher CGS

Recession

Negatives Positives

Lower

demand for

substitutes

Market

decline

Lower CGS

Financials

Key Metrics – LIWA comparison• No debt <= retired $39million LTD in Q12010

FSIN LIWAMarket cap 360mil 315milCurrent price $9.57 $10.84Ownership 34%/51%-Inst. 58% /38%-InstP/E(ttm) 7.65 11.57Operating margin 21.89% 17.33%Net Profit margin 17.61% 9.44%Current ratio 11.32 8.64ROE 15.06% 23.84%ROA 9.82% 22.92%EPS 1.22 0.92Capacity 52,400 MT- CCA 7,500MT-CCA

17,100 MT- CCS 25,000-CU

Stock

Insider TradingNothing exciting… but, it does show the company’s effort to align management and shareholder interests.

Institution Trading

Valuation

APV Model

• Current price ~ $9.32 (4:00pm, Oct 29) • Target price $13.62• Key assumptions

▫ Growth 40% near-term, 15% long-run, 4% terminal▫ Gross profit margin slowly eroding▫ SG&A ~ 8% historic▫ Tax rate 15% ->26% due to expired tax break in China▫ No significant CAPEX in 2010; growth with sales▫ Depre/Amort 30% of CAPEX historic

=> 17.5% operating margin in the long-run

APV Model

• Working Capital percentage of sales ~ 25% in the long-run• Small cap premium ~ 2%• Midyear convention: 2010~ 0.5, 2011~ 1.5 etc• Additional $5million for the Jinchuan purchase to be paid

end of FY2010. Decreases free cash flow.

Scenario Analysis

•Bearish price: $8.17 ($7.37- $9.07)▫ Terminal growth 1% slower than GDP▫ Gross margin erodes at 1% annually, vs. 0.5%▫ Unable to bring working capital requirements down

from 40%.

•Bullish price: $16.15 ($14.53- $17.94)▫ Able to secure gross margin at 30%▫ Preferential tax benefit extended for 2011.

Conclusion

Conclusion• Growth opportunities• Well managed • APV valuation puts stock price at $13.62 vs. current

$9.32 => 46% return• Q3 Earnings Announcement: November 2

Recommendation: BUY

Analyst Estimates

•EPS $0.34 Q3; $1.28 FY