Longhai Steel, Inc. (fka LGHS)

[WhiteSahara]

I emailed Steve Ross the following today:

Dear Sir,

As a shareholder, it was gratifying seeing the PR from last week providing insight into LGHS's rapid growth and 4th quarter earnings. Thank you for the guidance.

Based on the current PPS of $1.30, this places LGHS's PE ratio at .54, a completely ludicrous market valuation for any legitimate firm in a solid business sector and growing rapidly. LGHS is valued at about 1/10 the average PE for a U.S. listed Chinese stock.

There have been huge legitimacy issues with many Chinese securities termed as "variable interest equity" or VIE by U.S. standards? Many have misreported or overstated earnings. How can LGHS combat this problem, achieve legitimacy with the U.S. markets and achieve a fair market value in your opinion.

Thank you for any feedback,
Airdale

His response:

Airdale,

Thanks for your support of Longhai. Interesting enough, I am actually at the Roth Capital Conference until mid-week, and a major conference focus is on China, Chinese public companies and the points you raised. Most of the "China experts" are here, as well as a considerable number of public Chinese companies. I can provide a bit more thorough response later in the week, or catch up by phone if you like (my office number in California is
xxx-xxx-xxxx), but the short answer from everyone is to take exactly the steps Longhai has been: to differentiate the business through best practices in corporate governance and transparency, so that investors can have confidence in how the company is being run and reported. The new Board, new accounting firm and increased visibility are all necessary steps to have Longhai approach fair value. It is a terrific business, well-managed and
with significant upside, and I am confident we will get to where we should be as a public company.
Best regards,
Steve
The website for Ross's conference: http://www.roth.com/main/Page.aspx?PageID=7005