Out of the Gate: Gushan Environmental
Monday March 31, 10:11 am ET
Biodiesel Producer Gushan Environmental Plunges on Analyst Downgrade After Big Gains
NEW YORK (AP) -- Shares of Gushan Environmental Energy Ltd. fell sharply Monday morning after an analyst said the Chinese biodiesel company is overvalued but still poised to take advantage of diesel shortages in China.
Piper Jaffray analyst Charles J. Fishman downgraded shares of Gushan to "Neutral" from "Buy" in a note to investors on Monday. He said that Gushan has already surpassed his 12-month price target of $14 after share prices surged more than 50 percent in the past five days.
Still, Fishman said Gushan is poised to take advantage of diesel shortages in China and growing demand for biodiesel -- which is diesel fuel made from agricultural feedstocks -- in Europe and the U.S.
"Gushan is the largest and lowest-cost biodiesel manufacturer in China and is well positioned to take advantage of the (Chinese) renewable fuels policies being implemented," Fishman said.
Fishman pointed out that three new biodiesel plants are scheduled to begin operation in 2008 which, coupled with the company's four existing plants, will boost Gushan's biodiesel production 67 percent to 400,000 metric tons of biodiesel per year.
Shares of Gushan lost $1.50, or 10 percent, to $13.50 in morning trading.
