While some investors are still cautious about Chinese public company stocks, others recognize that the last several years have represented a rare buying opportunity to purchase the stocks of select companies that are delivering on the hyper-growth promised when the waves of Chinese companies were originally entering the U.S. public markets. The public companies in the steel industry in China represent a snapshot of what has been occurring in that economy, and how certain management teams have navigated the challenges. While the companies below are all in the steel business, they operate in different parts of the steel chain. It is possible to see which ones are delivering on the key metric of sales growth.

General Steel Holdings, Inc. (NYSE:GSI) is the best performer from a revenue growth standpoint. Headquartered in Beijing, GSI produces a variety of steel products including rebar, high-speed wire and spiral-weld pipe, and has operations in the Shaanxi and Guangdong provinces, the Inner Mongolia Autonomous Region, and the Tianjin municipality. Since FY 2007 through the Last Twelve Months (LTM) as of June 30, 2014, GSI has grown their sales from $1.35 Billion to $2.34 Billion, a growth of 73%. The Company is also currently exploring going into higher margins products along the steel production chain. Earlier this month, on August 15, 2014, GSI announced the signing of a memorandum-of-understanding with the Tewoo Group, a diversified state-owned enterprise that operates businesses in commodity trade, logistics, real estate development, financial services (ranked 51st on the China List of Top 100 Enterprises and 185th on the Fortune Global 500 List) to co-develop bulk commodity e-commerce business. This new business joint venture could prove to be quite interesting, and is related to their existing core business and would build upon GSI's strengths. While their debt levels are a bit high, their operating performance has recently surged, with the company reporting for Q2 2014, gross margins at a 36-month high of 4.8% and earned positive EBITDA of $33.6 million, an improvement of $54.4 million from the same period of a year ago. The Chairman and CEO also telegraphed to the market that he is a believer by leading a financing round of $7.5M earlier this year.

Ossen Innovation Co., Ltd. (OSN) came in a strong second in looking at sales growth. Headquartered in Shanghai, Ossen is a manufacturer of coated and non-coated customized pre-stressed concrete steel materials used in the construction of bridges, highways, and other infrastructure projects all over the world. Since FY 2007 through LTM as of June 30, 2014, OSN has grown their sales from $82.7 million to $139.1 million, a growth of 68%. Ossen had the highest, and most consistent net income margins amongst all the Chinese steel companies, which has been 5.7% over the Last Twelve Months as of Q2 2014. For investors looking for steady performance, and high sales growth, Ossen has delivered. The other two steel companies on this list have disappointed investors, either by not meeting their reporting requirements, or in poor sales growth.

Sutor Technology Group Limited (SUTR) has had strong sales growth, but has made investors concerned for other reasons. Headquartered in Changshu, Sutor is a manufacturer of finished steel products, including hot-dip galvanized products primarily for use in the electrical household appliance and construction markets, and cold-rolled steel products. Since FY 2007 through LTM as of June 30, 2014, SUTR has grown their sales from $418.0 million to $561.3 million, a growth of 34%. As of market close on Friday, October 17, 2014, the Company's Enterprise Value / Sales ratio of 0.23x makes it the most undervalued of the Chinese steel companies. There are several potential reasons for this, but probably the most likely is the resignation of the CEO and President in February of 2014, and their filing a Form 12b-25 Notification of Late Filing for its Annual Report on Form 10-K for the year ended June 30, 2014. Global investors have very little tolerance for companies failing to meet governance standards, and any small hiccup in these matters is a cause for concern.

China Gerui Advanced Materials Group Limited (CHOP) is the Company that has had the most problems operationally. Headquartered in Zhengzhou, CHOP is a producer of higher-end, high-precision, ultra-thin, high-strength, cold-rolled steel products that can be tailor-made to the specifications of customers in the food packaging, telecommunication, electrical appliance, and construction materials industries. Since FY 2007 through LTM as of June 30, 2014, CHOP has had their sales drop from $196 million to $136 million, a sales decline of 34%. When CHOP made its market debut, there was excitement of how they would be less vulnerable to market swings because they were in a higher margin business, so the disappointment amongst investors has been especially acute. There have been a number of market and operational issues, but the most bizarre development came in their 6-K on September 4, 2014, where they announced that they were entering the Chinese cultural antiquities business, and had acquired a porcelain collection for a cash consideration of $234 million. While the Company may believe that they purchased this collection at a significant discount to its true value, most investors are left scratching their head to understand what that has to do with cold-rolled steel.

The four companies above really are a microcosm of what has occurred with public companies in China over the last several years. Some have responded to the challenges by growing through their issues, with companies like GSI and OSN delivering on that original promise of high growth that western investors were so excited about. Other companies like SUTR have been growing but are dogged by perceptions of governance problems, and then others like CHOP have responded with actions that don't conform to western styles of corporate governance. There are a lot of mispriced gems in the Chinese public company space like GSI and OSN, but you have to look hard to find them.