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Gulf Resources, Inc. Message Board

alan74z 131 posts  |  Last Activity: Aug 31, 2015 1:25 PM Member since: Feb 2, 1999
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  • alan74z by alan74z Aug 31, 2015 1:25 PM Flag

    Frankly if you had asked me after the last earning call how Management would be able to get back the stock above $1, I would have said that they would have to do a reverse stock split, or a major share buy back with a target price above $1 but would not have seen any other way but seeing the latest stock trend they could end up getting it there doing really nothing which would be surprising. Yes they have the recovery in oil prices to thank for but the funny thing is that even when oil prices were still on the down trend the stock had already started its recovery. Is it that the Indian opportunities which could use some of the idled equipment in some other places now redefining the prospect for backlog and revenues for 2016 ? Is it that with the sale-leaseback of the prospectors, they now have enough cash to survive any down turn in the industry, It is a short seller squeeze as some people call it. I don't know but what I know is that the current stock price recovery is impressive and was unexpected for me. If oil prices keep their current recovery trend even if limited to $50 for WTI, it will start changing the downward trend of the industry stocks and PGN would certainly benefit from it above average given the large short positions which amplify movements up or down.

    Sentiment: Hold

  • alan74z alan74z Aug 24, 2015 6:41 PM Flag

    Unless you need cash, now is not the time to sell, this is true for GURE as it is for most stocks with good potential, the market is in a correction period if not a bear period and in those markets you do not want to sell but put your shares aside, stop looking at their value everyday and wait until the market emerges from this correction/bear market. For GURE time should be on your side not as if the company is losing money every quarter when time could be against you without a change in the Business environment. GURE is going to remain profitable and generate cash quarter after quarter and in a down market they could have new opportunities to buy additional businesses for a good price and keep growing their size revenue and profit wise, then you have a NG play that could disrupt on the positive the performance to the company and finally the Board has committed to pay a dividend, the question is how much and when but last year they had said they were not considering a dividend so this was also a positive change. in last quarter's earning call. Again of course we still do not know if these elements will push the stock price up but they cannot push it down, so putting aside the current stock market crash, you are better off keeping your shares and forgetting about them than selling them. This again is if you do not need cash, if you do, you could be forced to sell some of your shares but I would do it when needed. Again this is only my opinion and what I am doing myself, every body is free to have his/her own opinion. best of luck.

    Sentiment: Strong Buy

  • Reply to

    Limbo Time

    by gocoltslionssuck Aug 20, 2015 8:26 AM
    alan74z alan74z Aug 20, 2015 9:43 PM Flag

    I bought some more but at the same time I want to manage my portfolio and cannot put all my eggs in the same basket, so yes there is a maximum I am willing to buy and then I will sit on it until it appreciates and certainly use as I have in the last opportunities to sell a small number of shares if it goes closer to $3 and buy it back if it goes back below $2 but those are marginal sales and purchases, the bulk of the shares will remain in my portfolio until we have more clarity about the NG permits and the dividend plan.

    Sentiment: Strong Buy

  • Reply to

    Limbo Time

    by gocoltslionssuck Aug 20, 2015 8:26 AM
    alan74z alan74z Aug 20, 2015 12:59 PM Flag

    I agree with you, my only diverging view is the timing, I do expect them to get the permit for the first trial well in a short period of time as they have already applied some time ago and this is just a production well to establish that there is enough gas to justify potentially drilling other wells. The local authorities should be willing to provide this permit soon. The main question will be that if such a production well is successful when will they get the permits for the other wells, and yes it could take time but China needs NG and if they know there is viable NG field, they will want to start getting this NG and the local authorities will want the revenues as well. Will they give it to GURE or to another more experienced NG company ? This is the big question but I do not think it will take years. I am still guessing that we could have this permit decision in the Spring of 2016 at the latest. If the permits are not given to GURE so the company will start distributing its dividend then, if the company gets the permits, first of all it should finally be good for the stock but they will certainly want to conserve the cash to build their wells and production infrastructure but they also mentioned that they would find a way to monetize this NG production,. Do they mean start distributing some of the profit generated by the NG production which would take time and makes your timing more probable or find a partner to who they would sell a portion of their rights and get some cash for this that they would then distribute to shareholders. We will have to see. Anyway my point is that I do expect that by Spring next year investors should have a better picture and this could affect the stock price. Until then I will not touch my shares, put them aside and wait for some news.

    Sentiment: Strong Buy

  • Reply to

    Proxy review

    by alan74z Aug 17, 2015 5:26 PM
    alan74z alan74z Aug 17, 2015 10:22 PM Flag

    and I fully understand you, the only thing is that if they give enough options at today's stock price it could provide an incentive to Management to focus on the stock price and benefit from it if the price increases significantly. they start having quite a few now at slightly below $1, so could be an incentive already but they need the Board to be also focused on it as they can do little without the Board approval.

    Sentiment: Strong Buy

  • Reply to

    Proxy review

    by alan74z Aug 17, 2015 5:26 PM
    alan74z alan74z Aug 17, 2015 5:41 PM Flag

    One more information in the Proxy, it also shows that the 600K options granted 4 years ago expired in March this year and were out of the money as their strike price was $4.97 a share, meaning that Management got nothing for those options. So they were too impacted by the low share price.

    Sentiment: Strong Buy

  • alan74z by alan74z Aug 17, 2015 5:26 PM Flag

    Just went through the preliminary proxy. Yes they are asking to increase the pool of shares the board could allocate by 6m shares from a left over of 1,1m shares to 7.1m shares. Last plan which was the 2007 plan had an initial authorization of 4.3m shares and in fact in 8 years they allocated 3.3m shares ot Management or on average about 400K shares leaving them with only 1.1m shares to be allocated. Last year they allocated 600K shares to the CEO, CFO and COO (200K each) as options at strike price slightly below $1 but this year they allocated also at a strike price below $1 only 150K each or 450K shares.
    The authorization is for multiple years like the previous one lasted 8 years, so if this one lasted also 8 years the 6m shares would represent 750K shares a year while the historical allocation has been 450K to 600K a year so not a crazy number
    In fact the effective compensation of the CEO, COO and CFO went down year over year significantly as those options are a significant part of their compensation, so I would not say that the board is giving the senior executives a high compensation in shares, this could have been because of the poor performance of the stock price and the belief that at a strike price of $1 a share the Board is providing an incentive significant enough if Management can over time increase the stock price, it seems that the vesting period is 4 years.....
    So I will vote yes to this request and to the executive compensation presented in the proxy
    I was more perplexed with the move from Delaware to Nevada as I know Nevada is less shareholder friendly than Delaware, they justify it by a saving of $180K a year of fees, I am still divided on this one as $180K is not that much but my vote would certainly not change their decision.

    Sentiment: Strong Buy

  • Reply to

    Crazy idea but could work

    by alan74z Aug 14, 2015 1:29 PM
    alan74z alan74z Aug 15, 2015 11:42 AM Flag

    I agree that this would be the ideal and easier scenario, do we have visibility of who the large holders of these bonds are ?

    Sentiment: Hold

  • Reply to

    Crazy idea but could work

    by alan74z Aug 14, 2015 1:29 PM
    alan74z alan74z Aug 14, 2015 8:48 PM Flag

    Yes exactly I didn't want to use the technical term as I have not sure of the level of sophistication of the people on this board, but it seems that we have very knowledgeable people !
    I agree that the buy back of the bonds is the most logical one, the limited buy back of stocks was to avoid going through a reverse stock split that cost money anyway and often doesn't help the stock price at all. If you did not have the threat of delisting and the need to anyway take an action, for sure buy back of stocks at this stage would not make sense at all but they will have to do something in the coming months anyway. You have also an excessive number of shorted shares and it would be nice to flush out some of these. It would not take a lot of money to do so and at the end to strengthen the ownership position of the remaining shareholders, and $10m or $20m would not compromise the survival of this company but I agree opinion can diverge on this one for valid reasons. Difficult to contest the benefit of the Bond purchases though.

    Sentiment: Hold

  • Reply to

    Crazy idea but could work

    by alan74z Aug 14, 2015 1:29 PM
    alan74z alan74z Aug 14, 2015 1:51 PM Flag

    and by the way these ideas are not unrealistic as I worked with companies who did exactly this in the past. Management would have just to decide if it is worth the cash they have or if they have a better usage of this cash and of course how much they are willing to use.

    Sentiment: Hold

  • trying to brainstorm right now.

    The current stock price is even below $0.60/share right now and the bonds trading at $0.30 and $0.40 to the dollar. PGN would love to buy the bonds at a discount but no large supply of such bonds, so here is what they could do:

    They can set aside $100m to buy such bonds and offer to buy those bonds up to $0.50 to the dollar up to $200m of bonds, holders of the bonds have to come up with a price they are willing to take not to exceed $0.50 to the dollar, it there are too many sellers, then the company will buy first the bonds with the lower offered price up to the $200m of bonds that they plan on buying. What do they have to lose the maximum they would pay is $0.50/dollar, if no one turns any bond, they buy nothing but if too many people are willing to sell, they could even buy for less than $0.50/dollar.

    If they do not do this for the bonds, I would set up $20m to buy back stock and would offer to buy up to 20m shares at a maximum price of $1/share. Same thing but I would expect immediately to find some people willing to sell their shares up to $1/share when the current price is $0.60. If again too many people want to sell their shares below or at $1, then the people asking for the lowest price will be bought first and the ones with the $1 price could not sell their shares, this could allow the company to buy over 20m shares and to certainly push the stock price up close to $1. It would also create certainly panic buy back from the short sellers who would now be competing to buy back their shares with the company. Reducing the float would also make it harder for short sellers to borrow the shares, so frankly for as little as $20m, the company could change completely the share price and the short sellers' landscape. Making it a lot easier to bring back the stock price to above $1 without an expensive reverse stock split.

    Again brainstorming ideas but I think the company should consider them seriously

    Sentiment: Hold

  • alan74z alan74z Aug 13, 2015 1:31 PM Flag

    I think someone said that Management had a change of mind regarding dividend and that could have come from the new large investors, the owners of the Chemical Business who got a significant portion of their purchase price in stocks that they cannot sell for 5 years. I think this person could be right. These people could be expecting to get a yearly cash flow from their Chemical Business as they did last year, in 2014 the Chemical company generated $15m cash from Op and distributed $10m as dividend. Not sure that they are willing to sit on shares for 5 years and not get any cash for 5 years from their Business while it keeps generating large amount of cash. Especially if the share price is not going through the roof and even if it did as they cannot sell a share, they could still want some cash during these 5 years. So yes I think that because perhaps of the pressure of these new large Chinese share owners and potentially the old one who also sold a Bromine facility for mainly shares, Management is revisiting its stand on dividend and what they said at earning time is now more of a plan. We will see but if frankly the company started distributing half of its additional cash flow from Op, which could be in the $60m range in 2015, that would be $0.64/share a year, even if it was "only" $0.50/share (less than 40% of OCF) and growing year after year with the growth of the OCF, this would be wonderful even if the stock price didn't go up but it would certainly go up as such a pay out would give even more credibility to the company and would represent a significant ROI for new shareholders. So yes let's wait for the NG development news but good or bad news on this NG would just impact the timing and size of the dividend not the decision to pay one. I still believe will have to be patient (getting tired of being patient but no real choice and I am not selling my shares at this stage for sure) but I do hope that by April we should have a better picture.

    Sentiment: Strong Buy

  • Reply to

    Estimates 0.21 Reported 0.51 (0.57 after items)

    by gringo33339 Aug 12, 2015 4:21 PM
    alan74z alan74z Aug 12, 2015 6:11 PM Flag

    Yes they beat estimates, I have seen numbers between $0.12 to $0.21/share in the estimates but removing the one time tax impact and various exceptional elements the earnings would have been closer to $30m instead of $47m or about $0.35/share still way above expectations
    The disappointing element was that they still spent a lot of CAPEX this quarter, not sure on what curious to read more on that $62.4m in Q2 versus $50.7m in Q1, I thought the Capex spending was going to be reduced over time. This definitely used some of their operating cash, I expected some increase in current assets in Q2 versus Q1, payable also went down.All these elements of current assets and liabilities used more cash but this was expected but it was a little more than what I expected $36m altogether between Q1 and Q2, yes those are potential source of future cash flow but at least in Q2 it reduced the increase in cash to only $26.6m when I expected something closer to $50m.
    Also disappointing that they didn't buy back any of the bonds at a huge discount with this cash, even $10m purchases could have ended up buying over $30m of bonds for a gain on repurchase of long term debt of $20m but they did not too bad, I hope now that they have all the cash from the sale/lease back they will be more aggressive at buying some of these bonds.
    So overall good results but still plenty of work to be done in the current tough environment but for sure no risk of bankruptcy in 2015 nor certainly even in 2016 and by then if the market doesn't improve weaker competitors could go belly up before they do.

    Sentiment: Hold

  • alan74z alan74z Aug 12, 2015 12:40 PM Flag

    I think that the Saudi are more or less achieving what they denied they were trying to achieve but we know this was their main goal, forcing all the additional shale oil production to retreat and closing down some operations, what they have a harder time fighting is the coming increase in Iranian production and the Iraq's increase as well. This will require them to cut production if they do not want the oil price to collapse below the $40/bblfor WTI that they seem to have used as a low enough price to justify some action from them. I could be wrong but if the price deeps below $40/bbl we could see more production cuts from the Saudi and some signals that they are not going to let the oil price go down any further.

    Sentiment: Hold

  • Reply to

    Results are out big increase from last Q

    by jamessalmon40 Aug 7, 2015 4:43 PM
    alan74z alan74z Aug 11, 2015 1:44 AM Flag

    sorry I was travelling today so didn't even listened to the conf call yet or answered messages. I agree the whole process is to gain credibility with investors especially institutional investors that today are staying away from small Chinese stocks and we cannot blame them given what has happened with 100's of small Chinese stocks. at any time a company can stop reporting its financials, go dark and the trading of the shares is then non existent or at penny prices even if the company is still a lot more valuable than that. How can you get the value for your shares, the only way and it is still being tested is by legally going after the company but it is a long and uncertain process and so far while it seems that some shareholders are making progress with some of their cases, we cannot say that there are lot of success stories, not that it will not happen but it takes years to get your money back if you manage to get it back. So sadly enough the companies who are still reporting their numbers and doing a good job are still suspicious as nothing could stop then from following the same path as these 100's of other companies and because of that their stock price is only reflecting a small percentage of their true value. How to get out of this environment is by convincing the shareholders that you are not going to go dark and get delisted not only that your assets are real (even if you still have to convince investors that you are not a fraud but after years of audited statements it should be less of an issue). How to convince investor of this, I don't know, but for GURE having local investors that are non insiders, owning a large amount of shares because of the latest acquisitions could at least be some kind of a protection as if GURE went dark those investors would lose a lot and would certainly be mad at the company. They are wealthy Chinese individuals who could start an action against the company in China. My opinion and my opinion only

    Sentiment: Strong Buy

  • alan74z alan74z Aug 11, 2015 1:29 AM Flag

    fully agree I have never seen a reverse stock split increasing shareholder value on the reverse it is seen as a signal that the stock has more room to come down and the company is concerned that the price could reach the critical $1 price, so no I would not support such a reverse split.

    Sentiment: Strong Buy

  • Reply to

    Good press release!

    by rmnew2fl Aug 8, 2015 10:56 AM
    alan74z alan74z Aug 8, 2015 12:28 PM Flag

    These are excellent questions but still perhaps a bit early to know, they have enough cash for the first other 9 wells if they get the permits as we know they will cost less than the first well, so less than $10m a well but if the NG field is large they would need to drill a lot more wells to exploit it plus the infrastructure needed, they could have to partner with another NG company or sell some of their rights. We should know in the coming months as I said before hopefully before the end of Q1 next year, this is when those questions will need answers.

    Sentiment: Strong Buy

  • Reply to

    Results are out big increase from last Q

    by jamessalmon40 Aug 7, 2015 4:43 PM
    alan74z alan74z Aug 7, 2015 5:01 PM Flag

    Great results, they beat my estimate of $0.20 EPS. I will now spend time on analyzing the results and the 10Q but my first reaction is positive. I also like the fact that they talked about the NG opportunity and approval process but also even more about the potential of a dividend. I had expressed in an earlier message the need at this stage to keep the cash but when they sort out the NG play to consider giving back some of the cash to the back to the shareholders dividend/buy back, at least they state they will consider it we will have just to see if they do it, but again good quarter and great comments. I am going to keep my shares and buy on any weakness for sure

    Sentiment: Strong Buy

  • alan74z alan74z Aug 6, 2015 3:50 PM Flag

    No way of knowing for sure and not only for a Chinese company but you have to rely on the review of the bank statements by the auditors when they review the financial reporting but if the bank statements are faked (it has happened in the past), if the company borrowed some short term money to show a higher balance at the end of the month but "omitted" to report such a short term loan, etc... Companies who want to cheat can cheat the only thing is that if they have to cheat quarter after quarter the risk of being discovered increase with time. This is why when you report your audited balance sheet year after year, the chance of having presented some faked numbers is coming down but still exists especially in a country like China where there are plenty of corrupted executives but once again not all executives are corrupted the price to pay for cheating on your financials has come up lately in mainland China, making such cheaters more nervous. You just need one person to break and report it to save him/herself and the whole scheme collapses. My point the longer a company like GURE as clean audited financials, the less risk that the cash number is fake but never 100% sure.
    By the way today is another dead day volume wise funny as earnings could come as early as today after the market close but certainly tomorrow before the market opens or at the close of market, the latest latest they can report is Monday but based on previous quarters my feeling is that it will be before Monday.

    Sentiment: Strong Buy

  • alan74z alan74z Aug 4, 2015 12:50 AM Flag

    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

GURE
1.69-0.01(-0.59%)Sep 2 3:59 PMEDT