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Gulf Resources, Inc. Message Board

alan74z 114 posts  |  Last Activity: Apr 21, 2015 2:12 PM Member since: Feb 2, 1999
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  • Reply to

    Gas news date?

    by cyclopz_n_taz Apr 21, 2015 9:13 AM
    alan74z alan74z Apr 21, 2015 2:12 PM Flag

    Yes it is now approaching 20,000 RMB/ton and we even have customers paying already 21,000 RMB/ton or around $3,380/ton, to put this price in perspective it is still lower than the average price of 2011, the peak year for Bromine prices as it was at $4,082/ton but the highest since then as 2012 was at $3,225/ton and 2013 at $3,002/ton while 2014 was at $2,866/ton, so if they were able to maintain this price or exceed it, 2015 could become the strongest year since 2011 for Bromine pricing. If prices are going up demand should also be there too, so hopefully we will also see an increase in volume not only prices, the price reduction of crude salt could just show that the Bromine production is going up and the by product crude salt supply is going up as well while the demand for crude salt is not up or at least not enough to absorb the increased volume therefore a price decrease.

    Sentiment: Strong Buy

  • Reply to

    Bromine Price up again....

    by marubadbad Apr 20, 2015 3:41 PM
    alan74z alan74z Apr 20, 2015 8:19 PM Flag

    Yes and the strike at ICL continues, reported today: "In the meantime, a strike at two of ICL's plants that started two months ago will continue. The bromine unit has been closed since workers left their posts in February"
    So all the elements of a significant price increase for Bromine and Bromine chemicals at least in the near future, yes I know the price of GURE stock is not driven by the Business fundamentals as otherwise the stock would already be at $5-$7 per share not $2.65 but the fact that the Bromine market is changing cannot hurt and could have been a trigger of the current stock price upside trend of the last 3 weeks...

    Sentiment: Strong Buy

  • Reply to

    Correlation between bromine and GURE

    by elpasojet Apr 19, 2015 10:24 AM
    alan74z alan74z Apr 19, 2015 7:23 PM Flag

    Yes I also expected PP&E assets to be a bit higher for SCRC as when comparing the ratio revenues to PP&E for other companies in similar industries like the giant ALB or ICL, we find annual revenues close to PP&E at cost while for SCRC PP&E at cost is about 50% of annual revenues but depending on their business model for example lease equipment versus owned or subcontracting of some activities and the specificity of the Chinese building and equipment costs, while the number seems light it doesn't raise a red flag for me.

    Sentiment: Strong Buy

  • Reply to

    Value of GURE

    by value_buyer_investor Jan 30, 2015 11:56 PM
    alan74z alan74z Apr 18, 2015 4:34 PM Flag

    I think that based on the latest developments and communications, that the buy out is not for the near future and certainly at a much higher price than the current market price if it happens. I believe nevertheless that such a Buy Out is still a possibility down the road if the stock price stays this low. I am always afraid that a Morgan Stanley will convince the Insiders that it is in their best interest to buy out the company and will offer to "assist" them as long as they get a piece of the pie. They have done it before and these investment bankers have been often driving those buy out on the cheap of several Chinese companies with stocks depreciated versus asset value or /and low PER's and made ton of money by doing so. So Yes the buy out is still a potential risk but not in the near future, i.e. next few quarters so we should be able to find out about the NG discovery and see the higher EPS materializing.

    Sentiment: Strong Buy

  • Reply to

    Value of GURE

    by value_buyer_investor Jan 30, 2015 11:56 PM
    alan74z alan74z Apr 18, 2015 11:22 AM Flag

    Goodwill is not amortized anymore this was done years ago, the GAAP rule today is that Goodwill has to be reassessed on a yearly basis and if the assumptions that justified the value of the company and therefore the Goodwill have changed, the company has to impair Goodwill, meaning write of a portion of it or all of it. This is usually the case when the revenue and profit generated by the acquired company have fallen short of the projections.

    Sentiment: Strong Buy

  • Reply to

    SEC Pro Forma Filed

    by tradelogic2001 Apr 17, 2015 5:00 PM
    alan74z alan74z Apr 17, 2015 9:31 PM Flag

    OK I went through the filing and here are a few interesting elements.

    1. The amount of goodwill is about $22m pretty close to what I initially forecasted based on my first look at the numbers
    2. Yes the amount of cash was $104m on 12/31/2014 but just before the acquisition as they had done it the year before the company paid 66% of its cash generated for the year in the form of a dividend or about $11m (they had paid $10m last year), frankly would love GURE to do the same thing lol) but that means that before the company was fully integrated the amount of cash was reduced by m$ 11 which will show in the Q1 cash flow as dividend paid to SCRC owners. Yes Gure including SCRC will certainly generate more than that in operating cash flow but it will keep the cash balance certainly around $104m at the end of Q1 depending how much they spent on the NG project.
    3. Given that they paid close to $80m on this acquisition the PER of SCRC given its $12m of net income (growing by 28.5% versus 2013) is 6.7, so the price GURE paid seems acceptable for such an earning potential
    4. It seems that GURE sold for about $5m of Bromine to SCRC last year as it was eliminated from the revenue and COS consolidation, so about 14% of SCRC COS and 5% of GURE sales.
    5. Based on this new consolidated balance sheet the book value of the company on 12/31/2014 was $7/share and $6.7/share if you remove the dividend paid to SCRC owners in January and excluding goodwill we have a book value of $6.3/share.
    6.the 2014 backward looking PER based on the latest share price is close to 4, the forward looking assuming $0.74 which now seems conservative not only because of the higher bromine price and volume but also due to SCRC beating their 2014 Net Income goal by 6%, would give us a PER of 3.4.....
    That's about it, no major surprises and overall it looks pretty good.

    Sentiment: Strong Buy

  • Reply to

    SEC Pro Forma Filed

    by tradelogic2001 Apr 17, 2015 5:00 PM
    alan74z alan74z Apr 17, 2015 5:57 PM Flag

    I am going to review the filing in details but my initial reaction, first nice to see they managed to beat the net income goal, they seem on a pretty high growth path too. We should have goodwill of about $25m (difference with the purchase price and the equity value), GURE paid $66m cash but gets back $24m resulting in a net cash position end of Q4 at $80+24=$104m or $2.23 per share.
    Frankly if the Chemical Business keeps growing and delivers their 2015 numbers,it is a pretty good acquisition and increased the value of GURE significantly not only by diversifying the company so less risky but also in term of EPS growth. Less risk and higher earnings should continue driving the stock price if they deliver on their expectations. The higher price for Bromine and Bromine Chemical products is another element that could seriously impact the operating results on the positive side. I'll review the 8K and let you know if I find something interesting besides those above.

    Sentiment: Strong Buy

  • Reply to

    Big Boys Not Fooling Around

    by tradelogic2001 Apr 17, 2015 12:59 PM
    alan74z alan74z Apr 17, 2015 4:55 PM Flag

    I didn't expect so little resistance at $2.50, I thought there would be some kind of a fight and that we would end below $2.50 not above. The uptrend seems hard to be stopped even when the markets around the world went down significantly, impressive but not unexpected. This concludes a very nice week with close to 20% increase and close to 50% over two weeks, not a stock you want to try to stop on the upside as you could lose your shirt. Again historically we are still far from the high prices of end 2010 when Bromine prices were at their peak and GURE shares were at $10+ but we are approaching the levels of March 2014 at $2.70-$2.85, if we get above $3.00, it will be the first time since July 2011. Just to put the current share price in perspective.... Happy about what started two weeks ago but still a long way to go and speak about returning shareholder value...

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 17, 2015 11:48 AM Flag

    sorry it was Q2 2014 at $2,863 not 2013.

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 17, 2015 11:34 AM Flag

    The price of Bromine is still up today again now at 19,500 RMB/ton or $3,135/ton, as a reminder in Q2 2013 the average price of Bromine was $2,863 or close to 10% lower and in Q2 2013 it was at $3,084 or 2% lower, so if the price would just remain where it is this will be the highest price in Q2 for the last 3 years but there is a possibility that the price goes up even more given the current market environment. Crude salt has seen a price decrease in the last 2 days but it could be a sign that the production of Bromine is also going up as when the Bromine demand goes up and more bromine is produced, the crude salt produced with it goes up as well and if the demand for Crude salt is not keeping up with the higher production, the price of salt comes down. Given that Bromine revenues are 5 + times crude salt revenues, the net impact of increased Bromine demand will easily more than compensate any crude salt price decrease.

    Sentiment: Strong Buy

  • Reply to

    Observation

    by southernred_dog Apr 16, 2015 10:20 AM
    alan74z alan74z Apr 16, 2015 11:44 AM Flag

    But in fact if you take a look at the current stock price it is only 8% above where it was just a year ago, what happened during this one year, they generated $46m of operating cash flow, they bought a chemical Business which should increase their EPS by 50% year over year and diversified further their Business, they announced the potential of a NG discovery, the price of Bromine and Bromine chemicals is on an uptrend versus relatively flat to down trend a year ago. So 8% is not much even if given where it went shareholders feel some relief but nothing to be too excited about yet.... Just wanted to put things in perspective

    Sentiment: Strong Buy

  • Reply to

    Bromine news confirmed going forward....

    by cyclopz_n_taz Apr 15, 2015 4:37 PM
    alan74z alan74z Apr 15, 2015 6:31 PM Flag

    I am blushing :) But I must say that I enjoy having some intelligent people to talk to on this board, not always the case in other boards...

    Sentiment: Strong Buy

  • Reply to

    Bromine news confirmed going forward....

    by cyclopz_n_taz Apr 15, 2015 4:37 PM
    alan74z alan74z Apr 15, 2015 5:11 PM Flag

    Nice to see that the company is confirming what we had seen on the Bromine market and the latest increase in the Bromine price in China as well. I would say that with such a statement, I would see it tougher for the Insiders to buy out the company below $7 or $8/share based on book value and free cash flow multiples that will even improve if the price of Bromine goes up, and without including the potential of the NG discovery. So at least the threat of a low ball buy out by insiders seems less an issue given that if they were planning on doing it they would not have issued this PR. Yes there are large investors who have been trying to keep the price down and I am still trying to understand their reasons.

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 15, 2015 4:28 PM Flag

    My guess is that it could be both therefore C, I do not see why otherwise you would have people trying to keep the price down on large volume, the amount of shorted shares doesn't explain such high volume price manipulations. You had less than 600K shares shorted at the last report and less than 500 contracts on put options all dates all prices representing 50k shares, so volume we have seen on this stock lately is certainly not justified by short sellers or put buyers. Long term investors who are seeking value would certainly not sell or not sell a lot of shares now that plenty of positive potential news could be coming in the next 1 or 2 months, at least they would wait to see what is announced before selling. Again my opinion .

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 15, 2015 11:22 AM Flag

    Yes it continues again over 3% today compared to Yesterday now close to 9% up since April 6th.....There is definitely a change in the Bromine environment, each percent is $0.01 addition in yearly EPS assuming no volume change but a higher price means higher demand so this could be a lot more, the $0.74 EPS forecast assuming no change in the Bromine, crude salt and chemical pricing (which has been going up too around the world), could now start getting closer to $1 EPS if the trend continues ! I now firmly believe that this was the trigger that forced the large investors who were trying to keep the price down to at least for the time being fail to keep it down...

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 14, 2015 11:16 AM Flag

    Here we go again the price of Bromine is up again today, it has been up every single day since April 6th now approaching 19,000 RMB/ton or over $3,000/ton, level it had not seen for some time now. Let's see how long the upside continues but definitely good for future earnings especially if the demand is also increasing as it would be expected if prices are up. With Chemical prices going up too around the world by 20% to 30%, the EPS for 2015 of $0.74 seems to be now conservative...

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 13, 2015 2:14 PM Flag

    To put things in perspective each 1% price increase of Bromine would add using the 25% tax rate about $0.01 to earnings per share for the year and this is assuming that the price increase doesn't result into a volume increase as well as it should. So the 5% price increase of the last week would add about $0.05 to the EPS for the full year. Not huge but if the price increase continues it could quickly impact EPS significantly, then if they managed to increase volume as well it would just multiply the EPS increase effect. So while I believe the price increase is not only driven by the Bromine market change of the last few weeks, it could have been a trigger forcing the large investors which were trying to keep the price down and now faced some headwinds to give up (at least for the time being) and to let the price appreciate. I do expect them to find a new price level that they will try to defend and keep the stock price at for whatever future plan they have.....

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 13, 2015 12:01 PM Flag

    OK so this time something is really going on with the price of Bromine, it gained 2.8% today and has been up close to 5% now in a week, I am sure this is now part of the reason why investors are jumping in not only the $0.74/share earning for 2015 will be increased if the price trend continue but given that GURE was already was below value and the potential of a significant NG discovery. Difficult to keep the price as low as it was now. Yes the volume indicates that large investors (the Big Boys) are entering in. My guess is that the uptrend could now last for some time, there could be profit taking but I do not see any reason for a change in the trend until earnings at least.

    Sentiment: Strong Buy

  • Reply to

    price of Bromine and Bromine chemicals

    by alan74z Apr 10, 2015 11:45 AM
    alan74z alan74z Apr 11, 2015 12:54 PM Flag

    In case you have not seen this as well two days ago:
    Goldman Sachs upgraded Albemarle (NYSE: ALB) from Neutral to Buy with a price target of $66. Analyst Robert Koort pointed to a recovery in the market for oligopolistic bromine.

    Koort explained, "A combination of strike-related production challenges for ICL in Israel along with recent substantial price initiatives by all three global producers (ALB, CHMT, ICL) suggest this challenged business may be on the brink of margin expansion. The bromine franchise is a key component of ALB’s portfolio and these improving conditions could help end a multi-year pattern of downward earnings bias at ALB that have caused substantial underperformance in the shares and eroded investor sentiment.

    It really seem that they could be a change in the Bromine pricing environment which would certainly spill over to China as well. You have 3 global producers in the world and if they decide to increase the price of Bromine and Bromine chemicals which they just all announced, prices will go up. Smaller players like GURE would benefit from it as well.

    Sentiment: Strong Buy

  • alan74z alan74z Apr 10, 2015 9:54 PM Flag

    Yes it was filed on 4/10/2015 but the date of the event was as of 03/31/2015 meaning that they sold shares end of March and ended up below 5% requiring this filing so the impact of their sales would have been end of March not really in April. Anyway, the key driver for this stock will be their ability of renewing the expiring contracts and while the renewal price will be lower NE has shown that themselves were able when they renewed their contracts to limit the price reduction to less than 15%, I expected something closer to 20% but we will see. The prospector financing of the 2 existing rigs which are now not used as collateral to any loan is also the other element that could move the stock price significantly. We will see the FSR next week for the first element but could have to wait until Q1 earning call to find out more about the second one. We will also see by then how much operating cash flow they generated in Q1 and how they used all that cash, reducing the revolver or buying back some discounted bonds. I know that they said they would certainly not buy back these bonds but they did it last quarter, so we will see...

    Sentiment: Hold

GURE
2.4801-0.0499(-1.97%)11:37 AMEDT