Initiation of Research Coverage: GSE Holding, Inc.

Wednesday, March 21, 2012

William Blair & Company initiated research coverage of GSE Holding, Inc. (GSE $13.23) with an Outperform rating and Aggressive Growth company profile. Based in Houston, GSE provides custom-engineered geosynthetic containment solutions for environmental protection and other containment purposes with applications in the waste management, mining, liquid containment, coal ash, and shale oil and gas industries.

Analyst Brian Drab estimated that GSE would earn $0.71 per share in 2012 and $1.18 per share in 2013.

“GSE holds the No. 1 share position in the global geosynthetic containment solutions market,” Drab said. “Geosynthetics play a critical role in environmental protection in industries such as waste management, mining, and liquid containment. The global geosynthetic containment solutions market is about $1.7 billion and is expected to grow at a 6% compound annual rate through 2015. But we believe GSE’s above-average exposure to fast-growth emerging markets, new product introductions, and potential for market share gains could enable the company to grow revenue at a rate of better than 10% annually for the next several years.”

He continued: “Over 35% of GSE’s sales are generated in emerging markets. We expect strong demand for the company’s solutions in developing economies, driven by relatively faster economic growth in these regions and specifically by the trend of increased wealth leading to increased consumption and waste. Company sales in China, for example, grew over 50% in 2011. We expect the industry to grow at a high-single-digit annual rate or better in emerging markets over the next several years.”

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