Fushi Copperweld produces copper-clad aluminum and copper-clad steel wire products. It has manufacturing facilities in China, the US, and the UK. The company sees opportunities for growth in China's expanding telecom industry and through strategic acquisitions. While dependent on copper prices, the company's performance is expected to improve with economic recovery. Financial analysis shows the company has no debt, high margins, and the stock may be undervalued based on an APV valuation model. The presentation recommends buying the stock.

1. FUSHI COPPERWELD (NASDAQ: FSIN)
VALUE PITCH
F. Batten Fund
Yinhan Zhang
November 1, 2010

2. Agenda
• Company Background
• Business Opportunities
• Financials
• Valuation
• Conclusion

3. Company Background

4. 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

5. Leadership
Fu, 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.

6. Leadership
Wang, 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.

7. Geographic and Product Segment
SALES 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.

8. Recent Acquisitions
2009 2008

9. 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.

11. Business Opportunities

12. 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

13. 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)

14. Price of Raw Materials
LME Copper Price Graph (US$/metric tonne)

15. Revenue and Cost

16. Global Economic Recovery – Copper
Price Rebound

17. The “Triple Play”
The
economy
Price of
copper
FSIN’s
performance

18. Recovery
Negatives Positives

19. Recession
Negatives Positives

20. Financials

21. Key Metrics – LIWA comparison
• No debt <= retired $39million LTD in Q12010
FSIN LIWA
Market cap 360mil 315mil
Current price $9.57 $10.84
Ownership 34%/51%-Inst. 58% /38%-Inst
P/E(ttm) 7.65 11.57
Operating margin 21.89% 17.33%
Net Profit margin 17.61% 9.44%
Current ratio 11.32 8.64
ROE 15.06% 23.84%
ROA 9.82% 22.92%
EPS 1.22 0.92
Capacity 52,400 MT- CCA 7,500MT-CCA
17,100 MT- CCS 25,000-CU

22. Stock

23. Insider Trading Nothing exciting… but, it does show the
company’s effort to align management
and shareholder interests.

24. Institution Trading

25. Valuation

26. 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

27. 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.

28. 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.

29. Conclusion

30. 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

31. Analyst Estimates
• EPS $0.34 Q3; $1.28 FY