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Gulf Resources, Inc. Message Board

alan74z 45 posts  |  Last Activity: 18 hours ago Member since: Feb 2, 1999
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  • I think as you said that investors especially large ones are not willing to buy small Chinese companies traded in the US because of the history of going dark, delisting, etc...Only large ones seem to attract such investors, how large is the question but if you look at the largest ones they have more reasonable valuations but most if not all the small ones still fully listed and reporting on time have ridiculous valuations and their message boards have exactly the same type of discussion we have here.

    Sentiment: Strong Buy

  • alan74z alan74z Aug 3, 2015 6:07 PM Flag

    I was ready to form a team of shareholders to try to gain influence with the Board, getting a board seat was definitely something close to impossible but having a voice that could be heard was possible. This was when the stock price was close to $1 and the cash was piling up with no large acquisition announced, only small additional Bromine production facilities. Since then lot of new developments have happened, the stock price is about double what it was, they have acquired this Chemical Business which is not a small acquisition but there is also this potential NG play. If within now about 8 to 9 months from now the NG play doesn't start materializing or any $50m+ acquisition has not been made, then there will be a stronger case for pushing for a shareholder activist group asking the company to start redistributing this profit to the shareholders, dividend or buy back. The Buy Back would benefit more insiders by increasing their ownership of the company and therefore making a potential going private offer more feasible so could be the route they will prefer anyway. This shareholder group would not be able to gain any kind of power over the company as the number of shares will remain marginal but could make enough noise so the company would feel that they have to do something as it could tarnish their image with customers and partners, especially if they want to be seen as a responsible company caring for their shareholders. Let's re-discuss this potential action group in March or April next year and see where we stand by then.

    Sentiment: Strong Buy

  • alan74z alan74z Aug 3, 2015 3:06 PM Flag

    I really are more interested to see how much net debt is coming down, they should have generated north of $150m of cash in Q2, the prospector sale/lease back deal will not show until Q3 and this deal should reduce the amount of the revolver credit to zero but not until Q3. Just curious what they used the $150+m of cash in Q2 for and adding also the $85m on the balance sheet by the end of Q1, they would have ad over $200-$250m of cash to work with. If they used some of it to buy back some of the bonds this would be good news as it would have reduced the net debt faster but we will see based on the trading of the bonds it would certainly be in the range of only $10-$20m of bonds bought back at best but yes at a significant discount so perhaps spending only $4 to $7m so nothing compared to this cash balance. So the only use could have been to reduce the revolver credit and Q3 will be interesting when they get this prospector money and bring the revolver credit usage to zero and with the extra cash flow of Q3 have extra cash to use. Of course if they take delivery of an additional prospector unit they will need this cash if they do not finance it but if they do they will also have a contract in place for this rig. Everything is still unknown this is why I am still a hold/slightly biased Buy on this stock until we see how they handle their balance sheet but compared to other similar companies I think they are in a better financial situation and others will go bankrupt before them if the market gets worse.

    Sentiment: Hold

  • alan74z alan74z Aug 3, 2015 12:39 PM Flag

    I agree that if the company wanted to push the stock price up a share buy back would make sense given all the cash they have but now put yourself in the mind of the Company's management and their stated number one priority: Grow the business profitably. Because of all the cash they have they can finance their growth without going to the banks in the current messy Chinese financial environment, they would not even need to raise cash by issuing new equity to the public, yes they could selectively use equity as part of an asset purchase but as we have seen it with the last Chemical Business they can set the equity portion price above market anyway and it can be a negotiating tactic selling to the owner of this business the potential of the stock over 3 to 5 years to get a good deal as frankly even valuing the stock price at $2/share at the time for this deal made the deal cheap compared to the earning potential of the Business. So put yourself in the company's mind, yes I can spend $10 to $15m on a buy back. the net result could be a higher share price but also $10-15m dollar less in the bank to finance my future growth and right now there are plenty of uncertainties about how much money I will need for such a growth. What does a higher share price does for my growth plans ? nothing, so why should I use this cash if my priority number one is growing my Business profitably. Again as a shareholder I want to see a higher stock price more in line with the performance of the company but I do not think that there is anything that can be done to force such a share buy back as long as the company has some significant growth opportunities.

    Sentiment: Strong Buy

  • Reply to

    8-K filied Yesterday Earning Reaffirmed

    by doneatforty Jul 31, 2015 12:13 PM
    alan74z alan74z Jul 31, 2015 1:06 PM Flag

    Yes nice to come back to discussing the Business. One week to wait to see the Q2 results and them reaffirming the numbers while they must know what Q2 looks like already is a good sign. I still hope to see $0.20 EPS in Q2 and some increase in the cash balance as no major investment yet in NG, yes they should have some investments in improving the Bromine production infrastructure but less than what they should generate in cash in Q2. So overall an EPS trending to $0.74 for the year, a cash balance around $120m for a market cap of $90m this morning and a forward looking PE ratio of 2.6 !! Let's hope we will get out of this dead trading zone with volumes even below 100,000 shares a day and when we do we see the share price getting a bit closer to the value of this company. We are over the middle of the trading day and only 10,000 shares have been traded so far, this shows that no one is willing to sell but no one willing to buy too, so let's hope their earning release and earning call will change that, hopefully if they deliver on my expectations in favor of the current shareholders.

    Sentiment: Strong Buy

  • Reply to

    Earnings @ 3-4 weeks away...

    by cyclopz_n_taz Jul 24, 2015 10:45 AM
    alan74z alan74z Jul 24, 2015 4:13 PM Flag

    sadly enough I do not expect them to do anything for the share price other than trying to grow and diversify the Business, I know they talked about dividend, share buy back and dual listing in another market but they never made any commitment repeating that growing the Business is their priority #1, the rest is just noise Yes shareholders can keep the pressure but do not think they will do anything else and nothing that shareholders can do to change this. They used the argument that they need their cash to grow the Business and with the NG play they have a point (especially with the current financial mess that China is in ) but if this play went away because they do not get the permit, we could make a stronger case for dividend or buy back but this is certainly 8 months to a year away...

    Sentiment: Buy

  • Reply to

    Earnings @ 3-4 weeks away...

    by cyclopz_n_taz Jul 24, 2015 10:45 AM
    alan74z alan74z Jul 24, 2015 1:22 PM Flag

    yes you are correct and my guess is that until earnings or close to it we will continue to see ridiculous low volume and a drifts down or flat as we have seen for now some time. The true test will be when volume returns (meaning in the 200K+ shares a day), and how the market reacts to hopefully a good quarter earning wise in the $0.20/share range on track for the $0.74/share guideline for the year. One element I will expect during the conf call is the production status of the first NG well, it was stated it would start producing in Q3 and we are in Q3, hopefully some news on the permit for the other wells but as they stated it could take up to a year it could be too early this quarter, hopefully next quarter. Finally I will analyze the performance of the new Chemical Business which is now the largest profit generation business of the portfolio, did it continue to grow as fast as it did in 2014 and first quarter 2015 ? How are the margins holding in this Business ? These will be key elements to review when earnings are out. I will of course share with you my review of the results. Once again good or bad results do not seem to be connected well with stock price given the stock price manipulations but in the long run they will have an impact on the wealth creation of the company and hopefully the shareholder value one day we can at least hope !!!

    Sentiment: Buy

  • Reply to

    expectations for Q2 earning call

    by alan74z Jul 14, 2015 11:21 AM
    alan74z alan74z Jul 14, 2015 11:58 AM Flag

    as to news of a dividend or stock buy back, I do not think we should expect such news until the NG play has been defined, if they do not get the permits or are enable to get such a NG play, then they will have no reason to keep that much cash even if they plan to expand their Bromine related Business but if they get the permits and find that they have a viable NG play, then they could need most of their cash if they decide to develop it by themselves as the main investor. Given the current Chinese financial markets it is certainly wise to hold on to the cash if such an opportunity exists as raising capital or debt could become tricky if the financial markets deteriorate further in China

    Sentiment: Strong Buy

  • In now less than a month we will have Q2 earnings and Q2 earning call. As I said before given the price of Bromine in Q2 and the full reporting of the Chemical Business in Q2, I would be disappointed if they reported less than $0.20 EPS in Q2, putting them on track for meeting or beating their full year $0.74 EPS for the year. This is not my only expectation, I do hope that they will report on the first NG well that they predicted would start producing in Q3 and also hope to hear where they stand in the administrative process of getting the other 9+ wells approved by the authorities for NG production. They should have kept their capital spending on the NG small as they won't start spending a lot of money until they are given those permits, they are doing some Bromine facility improvements but they should still have generated more cash than they used so I do expect their cash balance to be slightly higher than in Q1. Finally as the Chemical Business is now the largest business segment in term of Net profit, I will be curious to see if this Business continued the kind of growth we saw in Q1 as if we annualized the 2 months consolidated in their statements in Q1, they showed a nice growth versus 2014 which ended up already higher than what was estimated when they bought the Business.
    These are the things that I will want to see when they release their Q2 numbers and comments in their earning call. Again not sure what the stock price will do as it is still disconnected from the performance of the company and highly manipulated but good or bad news on these elements should have an impact at some stage.

    Sentiment: Strong Buy

  • alan74z by alan74z Jul 2, 2015 10:24 AM Flag

    So Q2 is over, now we have to wait until August 10 at the latest to get the results. My guess given the moderate increase in Bromine prices and certainly demand behind the pricing increase, the chemical Business higher prices too in Q2 versus Q1, and the integration of 3 months of the new chemical business versus 2 months in Q1, I would be disappointed if they reported less than $0.20/share of net profit putting them in a strong position to deliver at or above their $0.74/share earning for the year making the current stock price around 3x EPS and their share price below their cash value !!! If they deliver in such results not including any good news on the NG project, their stock price in theory should go up but again with the manipulation we have seen those days who knows !!!

    Sentiment: Buy

  • Reply to

    PGN bonds

    by xgrk88a Jun 5, 2015 10:36 AM
    alan74z alan74z Jun 19, 2015 12:46 PM Flag

    Yes if you bought the bonds at full price and are now selling them for $0.45 or $0.43 to the dollar,, you are losing a significant portion of your investment and if the company is the one buying them and canceling them, it could be viewed as a distressed exchange, I agree with Moody. When a company or a country renegotiate the term of their bonds and offer to buy them back at a fraction of their value it is a distressed exchange, here they didn't make sure an offer but the market is such that they can do it day by day with small volume but the end result will be the same if they manage to buy them all back at such a discount. Usually when you make a distress offer, the bond holders insist on having the equity wiped out or seriously reduced but if the bond holders are willing to sell their bonds at this price without negotiations with the company, so the end result is a lot more favorable for the equity holders if the company survives. Yes there is an "IF" but if the company manages to buy back most of the notes the probability of survival is for sure much higher.

    Sentiment: Buy

  • Reply to

    Bonds now at 90% of bankruptcy.

    by goskiing99 Jun 19, 2015 10:54 AM
    alan74z alan74z Jun 19, 2015 12:33 PM Flag

    not sure where you get your information or even if you get information but the bond buying continues today on the 7.25% at $0.43 to the dollar versus $0.41 two days ago, so no dropping of the price if you look at the historical chart of the last month. The good news is that the buying has been accelerating in the last 2 weeks and my guess is that the company is certainly behind some of it. They had $85 m in cash end of Q1, I project an additional $100m+ of cash generation in Q2 so they have enough cash to start buying a lot of these notes and then in Q3 they get the prospector financing that they will use to bring their revolving credit back to zero but this means that whatever cash they generate in Q3 could also be used to buy back more of these notes especially if the price remains this low. So no the bonds do not reflect 90% chance of bankruptcy and if bankruptcy there could be it would not be before 2016 or 2017 as 2015 is safe with the existing covenants and by the end of the year while their EBIDTA will have come down, so will their debt too allowing to stay within the covenants requirements.

    Sentiment: Buy

  • Reply to

    Bond trades active this week

    by cben15606 Jun 17, 2015 3:24 PM
    alan74z alan74z Jun 17, 2015 10:37 PM Flag

    Yes the buying continues this week mainly the 7.25% at a good price, interesting how the buying started to go up after the announcement of the Prospector financing. I know it is only speculation but would not be surprised if most of it is from the company feeling that now they will have enough cash in Q3 when they get the financing to start reducing their debt. Frankly $0.41 or $0.42 to the dollar for a 7.25% means the equivalent of writing off debt that pays today 17% interest on their current value. The best use of their excess cash, yes they will have to increase the board approval for more buying but this can be done in a day when they reach the current authorized limit. So I expect them to report some more buying back of those notes in Q2 and even more in Q3 when they get this additional cash. At 2m or more a week, they could easily buy back $25m/$30m a quarter at the current price for $11-13m. They could have to pay a higher price if they want to buy back more than that.

    Sentiment: Buy

  • alan74z by alan74z Jun 17, 2015 11:45 AM Flag

    Just FYI, I compared the two documents the original 10K and the amended one, the main difference is the inclusion of the proxy materials in the amended 10K, there was also one change around licenses in the risk factors but nothing significant. All the rest of the report was unchanged. Just for people wondering what changed with this amended filing.

    Sentiment: Buy

  • Reply to

    Not bad FSR

    by cben15606 Jun 15, 2015 4:21 PM
    alan74z alan74z Jun 16, 2015 12:11 PM Flag

    Yes Mexico is the bad element but again they reported that 2014 revenues linked to Mexico were only 16% of their total revenues and this was before the addition of the Prospector Business, so yes if they lost all of the Mexican Business it would bring down and it has already brought down their revenues and profit but they would still generate some profit even if small and for sure with $90m depreciation a quarter still a lot EBITDA to reduce their debts.

    Sentiment: Buy

  • alan74z alan74z Jun 10, 2015 11:30 AM Flag

    I have been checking the trading on the notes and in Q2 it seems that the trading in both notes has increased in volume and at prices around $0.45/dollar which means that they can buy with $10m more than $20m of notes, the volume seems to indicate that it will be int he 10's m for each note in Q2, if the company has been behind those purchases, it could be good news when they report their Q2 numbers but we will see, every dollar they spend on those purchases reduce the amount of debt and therefore allow them to generate less EBIDTA to cover the covenants which they are still far from breaching in 2015. I also expect that if they are doing so, they will certainly increase their buying in Q3 when they get the lease back money. In fact the Moody's downgrade could help them buying more notes at a decent price, the price didn't seem to have change with the downgrade, too bad.

    Sentiment: Buy

  • Reply to

    PGN bonds

    by xgrk88a Jun 5, 2015 10:36 AM
    alan74z alan74z Jun 5, 2015 12:11 PM Flag

    I went on Finra, Bonds, paragon and I found them selling at slightly less than $0.50 to the dollar, so yes they could perhaps get a better price than $0.64/dollar they got in Q1 but if they buy large quantities I am sure the price they will get will be higher than the latest quote but could be less than what they paid in Q1 but not $0.25 or less than people were quoting. If I were them I would buy a few more in Q2 before they get their lease back financing in Q3 but then would buy a lot more in Q3 especially if they still generate a decent amount of cash in Q3 if again they find sellers at the current price or close to it as some people could decide that the risk of them going bankrupt is small and would prefer to keep their bonds with a nice return.

    Sentiment: Buy

  • alan74z alan74z Jun 4, 2015 10:18 PM Flag

    Not sure where you get your .25 to the dollar, in their report last quarter it was only .64 to the dollar: "During the three months ended March 31, 2015 , we repurchased and canceled an aggregate principal amount of $11 million of our Senior Notes at an aggregate cost of $7 million including accrued interest. The repurchases consisted of $1 million aggregate principal amount of our 6.75% senior notes due July 2022 and $10 million aggregate principal amount of our 7.25% senior notes due August 2024". So yes with $300m they could buy if they can buy them at the same price as in Q1 $470m of their Notes. I would be happy if they used the Q2 cash generated certainly north of $100m added to some of the cash they already have ($85m) to buy back notes in Q3 and bring the credit used under the revolving facility ($650m facility) back to zero with the lease back money making them much stronger financially if 2016 turns to be a bad year.

    Sentiment: Buy

  • Reply to

    Explanation of deal this morning?

    by greedorfear Jun 4, 2015 10:05 AM
    alan74z alan74z Jun 4, 2015 11:01 AM Flag

    The way I take it looking only at the cash flow statement, they used to have a financing at 7.75% for their Prospector bonds, so a 7.5% lease back deal is certainly acceptable, they had drawn their revolver credit of $650m to $370m, so $280m used, adding back those $300m , they should have their revolver credit usage back to zero and they will certainly generate still a lot of cash in Q2, north of $100m, so yes they would be smart using some of their additional cash to buy back their senior bonds bearing an interest of 7.25% but selling at a discount of 36% last quarter at least, resulting in a real rate of 11.4%, they have $527m of outstanding 7.25% bonds, so they could reduce it significantly if they used only $100m to buy over $150m of those bond back. Not sure they will do so but if they don't they will sit on a lot of cash by the end of Q3 as I do not know what else they can do with this cash than reducing their debt, yes they have the prospector new rigs to buy but they will also certainly buy them only if they can contract them and if they do they can certainly also finance them the same way.

    Sentiment: Buy

  • Reply to

    ICL strike has ended

    by alan74z May 29, 2015 12:34 PM
    alan74z alan74z Jun 1, 2015 12:31 PM Flag

    I guess until we have Q2 earnings, the trading will be dominated by the sellers/manipulators, sad but it seems to be the case every quarter, anyway based on the 2015 projections and the potential NG play, I am not selling a single share and will certainly add a few if it went down below $2 again. It is priced right now at 2.8 times 2015 EPS not even considering the NG speculative play that should have pushed the PER a bit at least, and with over $2.5/share of cash, no way someone would buy my share for so little.

    Sentiment: Strong Buy

GURE
2.04+0.09(+4.62%)Aug 4 3:59 PMEDT