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Gulf Resources, Inc. Message Board

alan74z 41 posts  |  Last Activity: Jul 11, 2016 3:35 PM Member since: Feb 2, 1999
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  • alan74z by alan74z May 11, 2016 5:28 PM Flag

    As promised I will still comment on the results. My first reaction is disappointing, Yes Bromine prices went up but as I thought it was the case Bromine production is still flat to negative (this is exactly why prices are up supply have been kept tight as demand has not really increased much) . The Chemical Business was the most disappointing, especially the old Business. The new Business didn't do so well if you take the restatement (2 months last year, 3 this year). They blame it on the weak economy and on the Chinese New Year which impacted their orders, yes they say that since they have seen a catch up but not enough in the old Chemical Business to make up for what was lost in Q1, the new Business should do better.
    I will go through the report in details but this is my first take. On the Daying County project, nothing really new excepted for the fact they are still moving forward at the speed of a snail and expect real drilling to start in Q4 !
    On the positive they are getting close to having enough cash to finance the project with $148m out of the $170 needed, they should be there by Q3 at the latest even if they announced that they will spend some money on the Bromine infrastructure, hopefully not a huge amount.
    As usual not sure if this disappointing quarter will push the stock price up or down, previous quarters with great earnings saw the stock price going down so who knows this time disappointing earnings could push it up in this crazy trading world !

    Sentiment: Buy

  • alan74z alan74z May 5, 2016 10:35 PM Flag

    Yes if I am still owning my shares of GURE it is because I still believe that there is a potential for a good return otherwise I would have sold them, call me optimist, seeing the glass half full, yes I am very frustrated like most shareholders who have been around for so many years but I will not give up. Yes I send regularly communications to the company expressing my frustration but also suggesting them to take some actions to finally give the shareholders the return they deserve based on the financial performance of the company. My communications are not only complaints but also suggestions based on my knowledge of the stock market and my corporate business experience, but I must say that I am still learning about the Chinese way of doing Business and the Chinese Authorities way of interfering with the Businesses. Again I am not giving up and will keep pushing for such actions and if I gave up I would sell my shares and you would not see me on this board anymore. By the way I am considering reducing the amount of time I spend on this board as it doesn't bring me a lot of satisfaction or interesting points of view, there are a few exceptions with people posting valuable information but it is very limited. My observations and analyses are mainly for me and I was willing to share them but not worth my current frustration with this board.

    Sentiment: Strong Buy

  • When IR told me last time that Management was as frustrated as the shareholders by the poor performance of the stock, I decided to check how Management was compensated and went back to the latest proxy statement of Aug 2015 covering 2014 but my guess is the next one could be similar for 2015.
    So here are the numbers first in term of the fixed salary excluding stock options: The CEO got $48.8K last year, the CEO and COO both $32.1K , I agree that excluding stock options, this salary is pretty small and definitely low even in Chinese standards. As for the stock options they received 200,000 stock options in 2011, 2012 and 2013 and only 150,000 stock options in 2014. All options can be exercised immediately and over 4 years. So yes no vesting period but a relatively short life for the options, only 4 years. The ones allocated in 2011 had a strike price of $4.97 and they expired in March 2015 without being exercised as they were worth nothing. The ones they received in 2012, 2013 and 2014 were all with a strike price close to $1, so yes they have a value, so for the 550,000 options they have they are worth today using the current stock price about $250,000 but given that they were worth nothing in 2011, over the last 4 years their current compensation with options if they exercised them all today would be about $62.5K a year making their total compensation close to $100,000 a year. So yes I understand their frustration too as if the share price was at $3 they would have an option compensation worth over $1.1m each over the last 4 years instead of currently $250K. Next options expiring will expire in on July 16, 2016 with a strike price of $0.952, 200,000 shares each, so this should be enough of an incentive for Management to push the stock price up but sadly enough Management can only do so much, the Board is the one deciding and at the end the market has the final word. I agree Management which is compensated on only a 4 year stock performance must be frustrated too !

    Sentiment: Strong Buy

  • alan74z alan74z May 5, 2016 8:05 PM Flag

    so now I am also someone paid by the company haha
    It makes sense that the company write to me exactly what they then put in the chairman's letter (by the way the Chairman not the CEO), it would have been weird if they wrote something contradicting it. Anyway speak about the Business and give your opinion even if different from mine but stop personal attacks as I have never attacked personally anyone, just debated their ideas or inputs, leave it as a debate of ideas and opinions please, this message board is becoming way too nasty, please go back to discussing Business and stop attacking people. By the way I am French so never was raised with the concept of cheerleader haha

    Sentiment: Strong Buy

  • Reply to

    For the longs...

    by ashjames408 Apr 28, 2016 7:41 PM
    alan74z alan74z Apr 29, 2016 1:22 AM Flag

    Just checking historically where it was over the last 5 years it has been between $3 and $1, end of April 2011 it was $2.96, end of April 2012 $2.06, 2013 $1.06, 2014 $1.94 and 2015 $2.50 so today at about $1.48 it is pretty close to the lowest for an end of April for the last 5 years, nothing related to the performance of the financial results which have been improving year over year !!! So who knows where it is going to go next but breaking $3 would require some significant news for the shareholders/investors and by news I mean more than just good results as results have not been driving the stock price at all.

    Sentiment: Strong 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

    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

  • Reply to

    Q1 2016 report

    by alan74z May 11, 2016 5:28 PM
    alan74z alan74z May 13, 2016 2:39 PM Flag

    I went through the 10Q and listened to the conf call, so nothing much to add to my first reaction and yes the Chemical Business was disappointing this quarter. I am just curious to see their guidance for the year now, it will show us if they believe that the Chemical Business will recover from the slow Q1, hope to get this very soon, was hoping today. Yes we now have to wait until September/November, so Q3 earnings certainly to know what is going on with Sichuan/Daying county so around Nov 10 or about 6 months !!! One element that is relatively new to me is their desire to develop a non Chinese Business through export of Chemical products or buying foreign assets with their RMB cash as it is known that the Chinese Authorities are more flexible to allow companies to buy foreign currencies to purchase foreign assets than to pay a dividend or buy back shares, I think this is certainly something we should keep pushing the company to do even if it presents its own challenges, I think this would be a way to get out of this constrained foreign currency environment they are in today and would diversify the Company's assets outside of China. Growth seems to be their main strategy to get out of the current low share price environment but frankly developing a non Chinese Business could also be a trigger to a better valuation, not only it would show that they can use their cash to add measurable value but would also give them a path to paying a dividend or buying back shares even if the Chinese Authorities do not change their current policies. OK something to keep asking about to the company in the coming months.

    Sentiment: Strong Buy

  • 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

  • Reply to

    Website updated

    by sevendaysisall May 4, 2016 8:12 AM
    alan74z alan74z May 4, 2016 10:30 AM Flag

    Yes I went to the website and read the new message from the Chairman, I know it doesn't change anything but I was happy that first they started updating their website with more current information, the old letter was at least 3 or 4 year old. I also like the fact that the Chairman doesn't talk only about the Business performance and the Daying county opportunity but also addresses the shareholder value/stock price and initiative they are considering. I do know that Chinese companies with no foreign currency access like GURE have a hard time paying a dividend as the government limit the export of currency and the new item I liked is that they are considering developing an export Business (certainly the chemical Business) and that they are even looking at the possibility to buy a Business outside of China ! This is something new and if it happens would definitely provide a new opportunity for GURE but would give them finally a source of foreign currency generation. Yes this is an encouraging letter and I liked it.

    Sentiment: Strong Buy

  • alan74z alan74z May 7, 2016 11:02 AM Flag

    Thank you, I will not leave this message board but will limit my posts and spend less time on it, I will also still read the messages of people who have interesting things to say but will block the others or those who attack people instead of talking Business but thank you for your kind message.

    Sentiment: Strong Buy

  • Reply to

    Bromine price up...

    by sevendaysisall Apr 11, 2016 4:58 AM
    alan74z alan74z May 3, 2016 10:36 AM Flag

    and still going up today, it seems that we breached the 27,000 RMB/ton for the average price with quotes between 26,500 and 27,500. The highest it has been in years now. By the way read the press release of GURE on May 7th last year talking about the possibility of Bromine prices to increase in China, Mr Liu, the CEO, was right on at predicting it (go to their web site under press releases), right on excepted for the last sentence: "We believe we are on the right path to significantly increase shareholder value" !!!

    Sentiment: Strong Buy

  • Reply to

    Website updated

    by sevendaysisall May 4, 2016 8:12 AM
    alan74z alan74z May 4, 2016 10:47 AM Flag

    I prefer a long message addressing all the important items than a 3 or 4 year old message and yes there were new items in it that I found interesting. Again I know such a message will not by itself solve the stock price valuation but I am finally happy to read something about acknowledging it and listing the actions they are considering with the advice of investment bankers. I am also happy that they started updating their website. So do whatever you want with your shares but I know I am not selling my shares yet and giving up, I will continue buying more on weakness but right now waiting for Q1 results and see if they are in line with my expectations.

    Sentiment: Strong Buy

  • Reply to

    Bromine price up...

    by sevendaysisall Apr 11, 2016 4:58 AM
    alan74z alan74z Apr 28, 2016 12:25 PM Flag

    Yes crazy increase but nothing seems to help the stock price these days with manipulators keeping selling blocks of 10,000 at market so they bring the stock price down but it has a tendency to recover now and they have a harder time dragging it down it seems, my guess is the closer we get to earning the harder it will be for them but who knows ! We know Q1 earnings will be very strong compared to Q1 last year but my guess is that what will move the stock up will be more news on Daying County, a strong 2016 guidance and any positive comment on buy back or dividend, a great web site and some planned investor conferences would not hurt either. Let's wait and see but trailing 12 month earnings should shoot close to $0.80 making the current stock price at 1.8 times earning which is the lowest it has ever been in term of PER and less than one year of Cash flow from operations !!!

    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

    Bromine price up...

    by sevendaysisall Apr 11, 2016 4:58 AM
    alan74z alan74z Apr 29, 2016 12:16 PM Flag

    I am as frustrated as you are, I have given up seeing any significant action like a stock buy back, a dividend, a dual listing in another exchange, etc... until the end of the year but if by the 4th quarter when they will have the funding for Daying county and certainly better view of what Daying county can be as an opportunity, if they do not take a significant action to drive the stock price up, I could give up but right now I will not sell a single share and I have been buying a few more at the current price as I feel the risk is limited on the down side and the probability of seeing a higher stock price has better odds but by Q4 I will reassess my position.

    Sentiment: Strong Buy

  • Reply to

    New CEO Letter

    by yorgental2004 May 16, 2016 8:02 AM
    alan74z alan74z May 18, 2016 11:00 AM Flag

    great catch, yes their total asset numbers on page 22 are not correct, in 2015 they didn't include Goodwill and other items below PP&E, for 2014 no clue how they came with this number with an other non-current asset making no sense, they will need to correct those numbers.. As for the Bromine supply versus demand, it seems that it has been their policy to focus on Bromine margin more than on Bromine volume, the supply is tight because other producers have not increase sales as well because they either cannot increase sales as their production productivity has come down for lack of investment when the price of Bromine was too low for them to generate enough profit to do such improvements or because like GURE they have decided to not increase sales to get back to higher margins. It is true that when the price of Bromine was at its lowest the Bromine Business had margins close to break-even so I understand why they would limit supplies until the price gets to a higher margin, now the question is when do you start increasing supplies again, at what price ?

    Sentiment: Strong Buy

  • Reply to

    Website updated

    by sevendaysisall May 4, 2016 8:12 AM
    alan74z alan74z May 4, 2016 11:53 AM Flag

    Agree fully but for me the interesting new information in this letter was the possibility of developing their export Business and/or buy a foreign operation, this is something new and interesting that I would like to see happening. It would give them access to much needed foreign currencies but also help as their activities outside of China would gain them more credibility.

    Sentiment: Strong Buy

  • alan74z alan74z May 2, 2016 6:05 PM Flag

    tow elements will impact Q1 earnings year over year, one is like you said the higher price of Bromine providing better margins in both the Bromine Business and the Chemical Business as Chemical prices should follow to some extend the bromine price increase, the second element is that in Q1 2015 only 2 months of the new Business were included while in 2016 they will have 3 months. These two elements should help the Q1 performance year over year and make the profit look like booming year over year, Q2 will be more interesting as there is no Chemical business addition and the year to year comparison will be more reflective of the true growth of the Business revenue and profit wise. The strong price of Bromine should definitely help making Q2 a strong quarter too but the comparison year over year will certainly be less impressive. Anyway only about a week to wait and we will see.

    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

GURE
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