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Gulf Resources, Inc. Message Board

alan74z 230 posts  |  Last Activity: Jul 11, 2016 3:35 PM Member since: Feb 2, 1999
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  • alan74z alan74z Jul 11, 2016 3:35 PM Flag

    I agree with the first part, the judge sorts through the testimony very carefully but each side believe their story is the truth, the judge has to decide which one is the most credible and what impact the reorganization will have on the various group of players before coming to a ruling to accept or reject the plan. If he rejects it a new reorganization plan will have to be submitted taking into account why he rejected this current plan. The wordings of his order would be very critical for a new plan.

    Sentiment: Hold

  • alan74z alan74z Jul 11, 2016 2:21 PM Flag

    Don't underestimate the lawyers of the term lenders, they will try to delay as long as they can the decision especially if they feel the decision is not going to be in their favor, if they felt it was in their favor they would want a ruling asap, so any attempt to delay a decision is a good sign for the people supportive of the reorganization plan. These lawyers have to also demonstrate to their clients that they are doing their best to win this case, they also are paid more hours the longer it takes, so yes there is an explanation behind their desire to delay the decision. The judge has to let them present their case to its full extend and if their request for a delay is legally valid, he has to grant it to them or they could file for an appeal with some chance of success if he denies them their request. As times goes by and as they come back with shady requests at best, the judge will at some stage after having shown his willingness to listen to them, he will deny their new requests and will rule on the case and my guess because of the attitude of the term lenders' lawyers, the chance that he rules to approve the reorganization is high.

    Sentiment: Hold

  • alan74z alan74z Jul 7, 2016 5:34 PM Flag

    Yes I agree great letter with lots of examples of why what the Term Loan lawyers are asking is not appropriate, they will be given all communications between Paragon and their financial advisers (even the privilege ones) discussing the NE settlement but the Term Loan lawyers were asking for internal confidential work documents of the financial advisers that had not been even discussed/shared with Paragon, this is ridiculous as such documents could not influence Paragon when they made the decision to agree on the NE settlement and were internal work papers of the financial firm, it really shows how desperate the Term Loan agents are and they try to find ways to delay any decision of the judge certainly fearing it will not be in their favor. These people make me sick, holding hostage all the other parties in this bankruptcy, parties that have been negatively affected by such a bankruptcy but are willing to support this plan while they, the Term Loan investors, are not impacted by this reorganization and their chance of being paid 100% of what they own is pretty high. Curious to find out what happens tomorrow, could be a very critical day !

    Sentiment: Hold

  • Reply to

    Hello, anyone out there?

    by gocoltslionssuck Jun 29, 2016 7:50 AM
    alan74z alan74z Jun 30, 2016 11:48 AM Flag

    Yes everybody is waiting, first waiting for Q2 results which should be in line with last year (price of Bromine will be higher than the $3,177/ton of last year). The Chemical Business is what is the unknown after a slow Q1 start but they were telling us about orders having been booked late last quarter. Overall I expect EPS to be around $0.23 but we will see. Cash generation should have been good, the unknown is how much of the cash from operation was used in CAPEX for the old business and for the NG/Bromine new project. The currency was weaker in Q2 so there will be some currency impact on the balance sheet impacting the cash balance when converted in US$ but also the cash needed in US$ for the new NG project will also come down, it is at 1.1B RMB or using now an exchange rate of 6.64 RMB/$, we are now talking about $166m not $172m anymore, keep that in mind when looking at the cash balance versus the Daying county/Sichuan project financing needs.

    They also said that production of the first Sichuan project well should start in Q3/Q4, we are entering Q3 so they should have better visibility of when production will start now and hopefully soon a better assessment of the Sichuan’s potential, this will be what all investors are waiting to hear about in the Q2 conf call in August. I was also told by IR that Management is planning to attend some investor conference/investor road show in 2016, so waiting to hear when and where. So once again waiting to hear all about it in August but until then I do not have any expectation for some news, would loved to be surprised by some news before the earning call but not counting on anything.

    Sentiment: Strong Buy

  • alan74z alan74z Jun 20, 2016 9:22 PM Flag

    The main takeaway is that after 2 months, they are doing way better than they had in their plan cash wise, $36m over in operating cash flow in April and May compared to their bankruptcy financial plan, this is one more argument to convince the judge that the plan is realist and even in fact conservative, destroying the term lenders' argument that the plan is too optimistic and not deliverable.

    Sentiment: Strong Buy

  • Reply to

    Is everyone a nervous as I am?

    by shabamoon Jun 20, 2016 9:14 AM
    alan74z alan74z Jun 20, 2016 12:29 PM Flag

    Yes I am now used to the bankruptcy court system and one thing that I learned is never expect a quick ruling, it can happen in some rare cases but usually the judge wants to make sure that he/she has reviewed all information and arguments of the opposing parties fully before coming up with a final order, so it is extremely certain that the final order will not be issued this week, certainly not before end of June/early July but again there are a few cases where the judge went fast but this is the exception. Don't forget that the Term lenders can/will file for an appeal and if they do, the judge has to make sure he/she did everything the right way, so he/she will be very cautious before issuing an order.
    I am also in the camp who believes the bankruptcy will be approved as if it is not and the judge gives reason to the term lenders this would mean that a viable company under the bankruptcy reorganization has to be liquidated and the NE Mexican tax deal would also collapse as tied to the bankruptcy. I do not think a judge would want this especially if like now the oil Business environment seems to have gone through its worse period and is in recovery mode. It would not be in the interest of all other parties excepted for the term loan investors who would get their money back early instead of in 2021 but don't forget that under the current bankruptcy plan they will get full payment of the interests and payment of 100% of the capital in 2021 as in the original contract signed 2 years ago.....

    Sentiment: Strong Buy

  • I do hope PGN lawyers will add the latest IEA report to their presentation to the judge as it will reinforce what they projected in their financials. I read all the court filings and I also am in the camp of those who believe that the Bankruptcy will be approved by the judge, I do not expect a decision on June 21st as the hearing is two days and there are a lot of items to cover but there could be a decision on the 23rd or soon after. The main argument of the term lenders is that the financial projections are not realist and that the creditors would be better of if the company was liquidated as it is not viable. After a Q1 that was better than they had anticipated in their financial projections, after a recovery of the oil prices since the first part of the year and now with reports talking about demand and supply balancing in 2017 or even demand exceeding supplies unless OPEC production is increased significantly like in this IEA report, I think that the assumptions of PGN and their experts that we can expect a recovery in the offshore Business PGN is in by 2019 is even conservative. Anyway if you are the judge, you have one party that in fact is not impacted by this restructuring and is still getting 100% of what they had before the restructuring and want the a still viable company liquidated and when the largest creditors are willing to take the risk with an equity position to not be paid in full if the company doesn't perform as planned, I would find it hard for a judge to reject the plan and agree with the term loan creditors to liquidate the company, not in light of the current performance of the company (FY 2015 and Q1 2016) and not in light of the expert reports projecting an improvement in the oil market in potentially less than a year. So yes the judge will approve it, could ask for some small adjustments but my feeling is that it will be approved pretty close to what is proposed by the company. Again my opinion after going through the court filings.

    Sentiment: Strong Buy

  • Reply to

    Questions for GURE management

    by jjnoname May 21, 2016 11:45 PM
    alan74z alan74z Jun 16, 2016 11:24 AM Flag

    and one more thing, any question you ask cannot be a question about key unreported financials or key action that they cannot share with one single person but have to share will all investors as they could be in trouble with the SEC if they selectively shared with a few investors some key data or action item. For example you can ask them when they are planning to issue a guidance but not what is their guidance, or with regard to the NG project you can ask when they will be able to provide some inputs on what is going on but not details of what is going on. I am sure you are aware of these rules but wanted to mention it just in case.

    Sentiment: Strong Buy

  • Reply to

    Questions for GURE management

    by jjnoname May 21, 2016 11:45 PM
    alan74z alan74z Jun 16, 2016 11:15 AM Flag

    Yes I must say that they have always been responsive to me, and yes once it was pretty late in the evening their time when they did but I do not expect it to be always the case. I must say too that I do not send them too often a question, usually more around quarter end and yes there are times when it takes some time to get an answer but other times when I get it right away so no real rule.

    Sentiment: Strong Buy

  • Prices have come down now below 25,000 RMB/ton, still relatively high but the trend is down, not that the price of Bromine seems to have an impact on the stock price in fact lately the stock has been going down when the price of Bromine went up and is now up when it is coming down, doesn't make any sense but showing that the stock price has nothing to do with the financials of the company !!! Curious to find out if the price is coming down because of lower demand or because of higher production. Remember also that starting end of July the production will be reduced in some producing areas close to Shanghai because of the G20 meeting in September and the desire of the authorities to reduce pollution, this could have an impact on supply and could at least ensure prices do not go down any further.

    Sentiment: Strong Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 6, 2016 12:01 AM Flag

    I never saw this as an attack on 'Insider' but just a discussion on where the stock price could be heading after the company emerges from bankruptcy, I agree that the market will determine what the price will be and the market is difficult to predict but overall I share the feeling that this stock has plenty of room to grow, so I do not see a disagreement, how high no one knows. Still the main element that will drive the stock up or down is the overall offshore drilling market, I still recommend people to look again at the filing of March 25 to better understand the projections of the company in term of performance in the coming 3 years after this bankruptcy reorg. So yes I will give it a rest in fact I will go back to being a silent investor on this board and keep my analyses or comments to myself. Good luck too.

    Sentiment: Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 5, 2016 9:40 PM Flag

    My discussion was around net book value not market value, you are talking market value based on the financial projections of the company. The March 25th filing has not been updated and the income statement projections, the balance sheet projections and the cash flow projections are still the same and this is what has been used by the "experts" to come to this estimated market value. Yes I was wrong to assume a book value of $742m when in fact at the time of the exit from the bankruptcy it is projected to be at $23m (june 2016) but I also admit that using book value to come up with a potential stock price when comparing to similar companies is not valid in this case. So yes I was wrong ! At the same time Market value incorporates elements like balance sheet and free cash flow over the next few years and again it reflects the financial statement projections the company filed on March 25th , I do hope the financial projections will materialize and I agree that if they do, the company could be worth north of $742m or $5.5+ per share but because of the uncertainty around those projections, uncertainty related to the offshore drilling market recovery in 2017 assumed in those projections, because of these uncertainties I do not expect the stock price to reach $5.5 until we see such a recovery, I would be happy if the stock price reached $2 when the company emerges from bankruptcy hopefully in Q3 2016....

    Sentiment: Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 5, 2016 11:37 AM Flag

    I think we are both wrong and that using book value to predict potential share price is not applying in this case, I had taken the $742m as the book value of a reorganized PGN but it was more an estimate of the economic value of the company not the book value, in their filing 8K on March 25th when the company presented the financial projection of a reorganized company after the bankruptcy they presented the following numbers: 2015 shareholder equity - m$ 506 which after the reorganization would become in June 2016 $23m but given the company will still generate some net losses in 2016 it would end the year at - 139m and only start becoming positive again in 2018. I was wrong using book value to come up with a potential valuation of the share as it definitely doesn't work, and the economic value is perhaps the best estimate of the long term true value of the company but questions remain on first will they deliver on the projections that they presented in this March 25th filing and if they do what is long term, a year, two years or more. Of course the most significant element in all this is when will the offshore drilling market start recovering. So frankly right now I have no clue of what the stock price could be when the company emerges from the bankruptcy, I think it should be higher than it is today but no clue how high.

    Sentiment: Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 4, 2016 5:00 PM Flag

    Let's say the company emerges with $742m of equity/book value, then given the 134m shares this would be about $5.5/share, currently given the terrible market environment, similar companies are trading way below book value, NE for example is trading at about 28% of equity and RIG at 25%, so even if the stock traded when it emerges from bankruptcy at 25% of equity it would be at $1.37 but one could argue that given the low debt /equity ratio of the new company it should trade higher so yes a trading around $2 is not impossible. It will only go higher when the market environment changes and when new contracts start being signed, then it could go a lot higher depending on how successful they are at getting such new contracts versus their competition.

    Sentiment: Strong Buy

  • Reply to

    5:00 P.M. Eastern; 3 objections filed

    by jmmarque1 Jun 3, 2016 5:14 PM
    alan74z alan74z Jun 4, 2016 12:20 PM Flag

    on their latest 10Q at the end of March they showed slightly over $20m of tax liabilities, my guess is that the latest number the IRS provided is in line with this number, the IRS is making sure that the taxes will be paid in full when the company emerges from bankruptcy and will not be discounted as other liabilities could be. Very typical of what the IRS does in a bankruptcy case.

    Sentiment: Strong Buy

  • Reply to

    FYI ...

    by gr0operator Jun 1, 2016 2:32 PM
    alan74z alan74z Jun 3, 2016 2:33 PM Flag

    I hate when people spread some fake information, as a presidential candidate does !
    Saudi has at the current production rate over 70 years of proven oil reserves (they have 16% of the worldwide known reserves), so they are not out by the end of the decade, yes by the end of this century they could. As for the US which has only 12 years of proven reserves given the current daily production volume (2.2% of the worldwide proven reserves). By the way Syria and Yemen are not considered as significant oil producers, together they have 2% of the oil reserves of the Saudi and less than India or Vietnam !!!! These are 2015 numbers so include the shale oil proven reserves as well.

  • Reply to

    earning guidance

    by alan74z May 18, 2016 11:24 AM
    alan74z alan74z May 20, 2016 4:23 PM Flag

    Fully agree a cash acquisition outside of China of a compelling Chemical Business would be a major positive development for the company and certainly for the stock price.

    Sentiment: Strong Buy

  • Reply to

    earning guidance

    by alan74z May 18, 2016 11:24 AM
    alan74z alan74z May 19, 2016 11:20 PM Flag

    just one precision, they said: "These projections also assume that there will be costs but no revenues associated with the natural gas drilling project in Sichuan. Once drilling has begun, Gulf Resources will update these projections", this means that they have not included any revenue but only the costs of the drilling project but yes when/if NG or Bromine is produced, then there will be revenues and they will update their guidance upwards accordingly, it will not vanish in thin air or be given away lol
    As for the cost associated with this drilling, as someone had indicated it could be in the range of $300-$500K a quarter so no more than $2m for the year, yes my initial number was too high. I also agree that the $25m invested to improve the Bromine facilities seems high given the current low utilization rate but I also know that they are like all Bromine producers monitored for the impact they have on the environment and some producers if they do not improve their facilities could see their license revoked, so they perhaps have no choice but to do it but I am just guessing, I do not think they would spend the money of they didn't need to as they will need the cash for Daying county

    Sentiment: Strong Buy

  • Reply to

    New CEO Letter

    by yorgental2004 May 16, 2016 8:02 AM
    alan74z alan74z May 18, 2016 11:30 AM Flag

    excellent I had missed this thank you, now their Bromine production makes sense as well as the price of Bromine increase

    Sentiment: Strong Buy

  • Reply to

    earning guidance

    by alan74z May 18, 2016 11:24 AM
    alan74z alan74z May 18, 2016 11:28 AM Flag

    thinking about it I believe my $5 to $10m of expensed spending is certainly on the high side as most infrastructure costs will be capitalized anyway.

    Sentiment: Strong Buy

GURE
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