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Gulf Resources, Inc. Message Board

alan74z 29 posts  |  Last Activity: Jul 29, 2014 3:40 PM Member since: Feb 2, 1999
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  • I was going through the final proxy and reading the opinion of HL saying that yet $7.10 is fair compared to the $6.69 they considered fair last time too. Just looking at the numbers, since the last evaluation considered as fair, 2013 revenues exceeded of course the previous projection by about 50% but now 2014 Net Income projection has been increased by 33% versus the last model projection, the fact that the new facility construction which was supposed to have been built in 2013 at least $47m was supposed to be spent versus ZERO spent, now it is $90.2m that will be spent in 2014, curious to see how much was spent in Q1 so far and the total investment was moved from a total of $94m over 3 years to $131,2m over 3 years or an increase of close to 40% on these facilities, just as a reminder the current production facilities that enabled YONG to generate $662m of revenues in 2013 was $25m at cost, so now adding 5 times the amount of CAPEX to the existing facilities !!!! Then if it was not enough they decided to increase 2014 inventory from $212.7m to $333.2m or 57% more and the advance payment to suppliers for raw materials from $27.2m to $111.2m or 400% more.... Any way they could use to increase the Debt free Net Working Capital, in fact increasing it by 36% in 2014 new projection compared to the old one !!! All those tricks allowed them to show even a lower Unlevered Free cash flow in 2014 than what they had previously even if they do not show what the 2013 number was as it was a lot higher than what they had projected. Frankly anyone with a minimum of financial expertise can see that these numbers are cooked to come up to the opinion the Board wanted to get and have no credibility, especially when you see the numbers they had projected in 2013 that were completely off with what the actual numbers were.... Yes this is a joke and I do hope enough shareholders will vote no to defeat this new attempt.

    Sentiment: Hold

  • Reply to

    Final Proxy filed , the joke continues

    by alan74z May 3, 2014 11:56 PM
    alan74z alan74z May 4, 2014 1:53 PM Flag

    Because the insiders owning 1/3rd of the company have said they would refuse to sell the company even at a much higher price, it was in their previous proxy so with such a high percentage of the company and with the CEO also chairman of the Board, an hostile take over will fail. By offering $7.10 they keep a ceiling on the stock price ceiling that was at $6.60 initially, then $6.69, then $7 and now $7.10, this is why the price has been following those ceilings not able to pass $6.60 or $6.69 then, this round not able to pass $7 and now not able to pass $7.10. People who argued that $6.69 was a fair price must now wonder why they are even offering $7.10, those who knew $6.69 was not fair still know that $7.10 is not fair, my guess given the persistence of MS, sadly enough if the $7.10 is defeated, we will see another attempt within six month to a year to get it for certainly $7.60 if they continue with their ridiculous small increases!!! Making me sick but showing that MS will do whatever it takes to buy this company for a ridiculous price, the financials justifying the $7.10 are so biased and ridiculous trying to get as much cash out of the computation by inflating everything that can remove cash (CAPEX, Inventory, advance payments to suppliers), all together compared to Business as usual taking 2011 & 2012 as a base, they have removed in their 2014 end of year cash projection over $250m of cash or close to $5 a share between those 3 items !!!! This is why I keep voting NO

    Sentiment: Hold

  • alan74z by alan74z May 7, 2014 2:07 PM Flag

    Q1 earnings are around the corner, certainly a maximum of 3 trading days before earnings (perhaps even less). My expectations are that Q1 which is a slow quarter due to the Chinese New Year will certainly be in line or slightly better than Q1 last year (Bromine prices were relatively stable Q1 to Q1 at around 19,000 RMB per ton, it has come down in April to now only 17,000 RMB per ton but this will only impact Q2). The element that I will look at is the Chemical Business as this has become such a significant portion of the profit lately. So overall I expect Net Income in the $2m range or about $0.05/share, anything above this would be good news but I do not expect it.
    What will be interesting will be the cash flow picture as last year they were able to generate $13m in cash with their $1.9m net profit due to the fact that they have $7m of depreciation in their expenses and were able to reduce AR from $35m to $30, Q4 AR were at $44m, so I would again expect depreciation of $7 and AR down easily by $5 to $10m if their Q1 revenues were similar to last year. If the revenues were higher then AR would certainly end higher but Net Income would also be higher. Inventory has been so stable over time that I do not expect it to change dramatically. Overall I do expect them to generate at least $13m to $14m of Cash in Q1 ($0.35/share), we didn't hear of any significant CAPEX or acquisition in Q1, so my guess is that their cash balance of $ 108m could be now above $120m or over $3/share !!! I would love them to announce new acquisitions or investments in some Chemical production activities to use some of the cash to grow the Business faster. Given the current market environment, an acquisition would certainly be a better deal as asset prices must be depressed in a challenging China Manufacturing environment. Such an announcement would certainly help the stock significantly but let's see what happens first with Q1 result

    Sentiment: Buy

  • Reply to

    Q1 earnings

    by alan74z May 7, 2014 2:07 PM
    alan74z alan74z May 7, 2014 3:27 PM Flag

    I don't know what the stock price of a Chinese RTO reflects anymore, I don't know why the stock was trading at $1.04 a year ago before Q1 earnings, I don't know why it went to $3 mid march and now is back to $1.85 all this with no financial news about the company. GURE is not the only one with a stock price below Cash value, this is more the rule than the exception for these Chinese RTO's . All I know is that as a long term investor I look at the results and future performance forecast to decide if I want to buy or sell my shares and what I have seen lately and I am projecting for 2014 put me right now in the camp of holding my shares and even take advantage of this crazy market to buy some more if the price is low in my opinion and again my opinion is the only thing that counts for my investment decisions, each our own opinion and investment decision.

    Sentiment: Buy

  • Reply to

    Q1 earnings

    by alan74z May 7, 2014 2:07 PM
    alan74z alan74z May 8, 2014 11:53 AM Flag

    You are completely right and in fact I have used about 25% of my portfolio like this selling it when approaching or exceeding $3 and buying it back when approaching or below $2 and yes I have made some money bringing my average cost down, in fact right now I have been buying in small lots at the current price. I also agree that there is a chronic Chinese stock problem which I don't know how it will be solved one day if ever. Yes more transparency and allowing US regulators access to the Audit work would help but not sure if it will be enough, converting some of this cash into more verifiable assets like PP&E/buying other companies or if not, distributing some of the cash generated to shareholders would also certainly help.

    Sentiment: Buy

  • Reply to

    Q1 earnings

    by alan74z May 7, 2014 2:07 PM
    alan74z alan74z May 8, 2014 12:06 PM Flag

    By the way looking at last year's timing, they filed their 10Q on Thursday May 9th before the SEC deadline so would not surprised if they filed today or tomorrow instead of Monday which is the deadline but we will see

    Sentiment: Buy

  • Reply to

    Q1 Earnings

    by cyclopz_n_taz May 9, 2014 11:04 AM
    alan74z alan74z May 9, 2014 12:28 PM Flag

    Yes I am buying back the shares I sold close to $3 less than 2 months ago ! Waiting for earnings today or Monday...

    Sentiment: Buy

  • Reply to

    Q1 Earnings

    by cyclopz_n_taz May 9, 2014 11:04 AM
    alan74z alan74z May 9, 2014 12:30 PM Flag

    Just realized that by myself I am close to 50% of today's volume ! Yes there is no volume today, people are waiting for some news...

    Sentiment: Buy

  • Reply to

    Q1 Earnings

    by cyclopz_n_taz May 9, 2014 11:04 AM
    alan74z alan74z May 9, 2014 2:38 PM Flag

    I have one at $1.77 and one at $1.76 buying small lots at a time 1K or 2K :)

    Sentiment: Buy

  • Reply to

    1st qtr earnings .11

    by rmnew2fl May 9, 2014 5:01 PM
    alan74z alan74z May 9, 2014 6:52 PM Flag

    Yes they beat my expectations for a minimum $0.05/share in Q1 and very impressed by the Chemical segment performance, I will review the numbers in details but they are better than I expected, the only number I got right was the cash balance as I expected close to $120m or over $3/share. Now it will be time for them to announce some new acquisitions bromine or even better chemical manufacturing. Anyway a great quarter and as usual they filed again before the deadline on Monday. Happy I was able to buy some shares lately at below $2 :)

    Sentiment: Buy

  • Reply to

    Keep Some Shares For the Buyout

    by tradelogic2001 May 9, 2014 6:03 PM
    alan74z alan74z May 10, 2014 2:18 AM Flag

    I agree that any price they could offer would certainly not reflect the value of the company, look at YONG and how bad Morgan Stanley partnered with the Insiders to offer a price that is ridiculous versus book value or future cash flows, but they still pushed for it (even if it was rejected once already) and will sadly be able to steal the company away from minority shareholders at a ridiculous price. The main difference is that since they talked about a Buy Out YONG's Management has been downplaying the performance of the company, trying to hide value everywhere they could and providing gloomy longer term cash pictures showing that they needed to multiply by 6 their PP&E (from $25m to $150+m) to just sustain the Business !!! Reading the GURE 10Q comments, Management seems upbeat, explaining that the opportunities are there for them to grab them and grow the company further and not trying to hide their cash, so my guess is that management is not preparing a potential Buy Out. They could change their mind but their comments give no indication of such a pessimistic attitude to keep the share price down. Let's hope no Morgan Stanley or similar give them this idea !

    Sentiment: Buy

  • Reply to

    Keep Some Shares For the Buyout

    by tradelogic2001 May 9, 2014 6:03 PM
    alan74z alan74z May 10, 2014 2:33 AM Flag

    By the way I was reading the Street's recommendation to keep GURE as a hold and their main argument is that Net Operating Cash flow went down by over 37.5% from Q1 2013 to Q1 2014 which they say is making the Net Income improvement not that exciting. Not sure where they get their numbers from but Net operating Cash flow in the 10Q officially went down only by 5% and this is because of the Tax payment, it seems that they paid their taxes early this year, excluding the Tax payment, they would have seen their Net Operating Cash flow up 10% not the dramatic 37.5% decrease the Street is reporting. I am always mad to see people writing an article in a rush certainly and not taking time to verify their numbers !!! Other reason for the lower cash picture is the AR balance didn't go down as much as last year, stronger Q1 revenues would push them up but they also said that 68% of their over 90 day Receivables or close to $9m were collected by the end of April, so more cash to be reported in Q2....

    Sentiment: Buy

  • Reply to

    Keep Some Shares For the Buyout

    by tradelogic2001 May 9, 2014 6:03 PM
    alan74z alan74z May 11, 2014 3:24 AM Flag

    I just took the cash flow statement and it is under Net Cash provided by operating activities and it is Net earnings + Dep & Amort + or minus changes in other assets like AR and inventory and liabilities like AP or Tax payable. It is the GAAP defined Net Cash provided by Operating activities (or also called Cash flow from operations and it is equal to $12.8m versus $13.3m last year, the Street had last year right as they came with a 36% reduction in CFO but their 2013 was wrong at $8.6m, no clue how they can compute this. Income tax is not a cash item, the payment or lack of payment of income tax is what impacts the Cash Flow from Operation. Again no clue how they can have 2012 correct and come with 2013 so different than what is reported under GAAP. In fact if I take the Tax elements in both years, the numbers do not look at all as they stated.

    Sentiment: Buy

  • Reply to

    Keep Some Shares For the Buyout

    by tradelogic2001 May 9, 2014 6:03 PM
    alan74z alan74z May 11, 2014 3:29 AM Flag

    Sorry the Street reduction is not 36% but even worth at 37.5%, again no clue how they come to such a reduction while Net Cash provided by Operations in the 10Q was only down less than 5% and driven by AR not going down as much as last year (but also higher revenues which could explain it) and Tax payable liability being reduced due to the fact they paid their earlier this year.

    Sentiment: Buy

  • Reply to

    Keep Some Shares For the Buyout

    by tradelogic2001 May 9, 2014 6:03 PM
    alan74z alan74z May 12, 2014 11:54 AM Flag

    Thank you, I am not saying that a Buy Out is not in the work but I would be surprised if they announced anything soon as if it had been in the work, they would have tried to announce it before Q1 results and their positive comments which they knew would push the stock back up significantly, at least they would have tried to downplay their good performance to keep the stock price going up so much but they didn't and had optimistic comments (The late price reduction of Bromine would have been ideal but they said they expected the price of Bromine to remain stable). Again, if I were them I would consider a Buy Out as an option given the current low stock price compared to the Assets and cash flow value but my opinion and it is only my opinion is that it is not for the near future meaning the next couple of months but before each quarter report, in particular if the report is good, there will be a risk. and I will watch their tone when they comment on the results, if they start a negative tone in the face of good results, the Buy Out could be near.

    Sentiment: Buy

  • Reply to

    Whistleblower phone calls

    by plarger May 12, 2014 9:23 AM
    alan74z alan74z May 12, 2014 12:07 PM Flag

    I think that given these incredible results which had to be forecasted by Management when the SC made its decision to accept the deal or even when Management submitted data to HL about their projected financial performance in 2014 and beyond (HL which didn't even reflect last year's completely wrong forecast when they revised their valuation), yes Management issued some falsified and misleading forecast to justify their low valuation and I will also file an SEC complaint that I will then forward to the lawyers as not sure the SEC can do anything at this late stage. This is more than ridiculous, it is scandalous, and if YONG can get away with this, it gives a pretty bad picture of the SEC or the justice system in Nevada.

    Sentiment: Buy

  • OK I was surprised by the Q1 results completely unexpected, way above anything I could have imagined and the crazy thing is that the company and its board knew about this performance when they accepted the offer at $7.10 and released their 2014 financial projection which now seems way too low. Not only HL didn't take into account the 2013 performance that blew the company's forecast in their valuation but they now used a 2014 projection that will end up being well below actual performance.
    If I take out the Q1 revenues and Gross Margin and compute what they need to achieve to deliver their 2014 Revenues and GM we have the following numbers:
    Q2-Q4 2014 versus Q2-Q4 2013
    Revenues $689.4m versus 2013 $616.6m so a revenue increase of 11.8%
    Gross Profit $ 409.7 versus 2013 $383.3 or an increase of 6.9%
    Not so challenging anymore given their past performance !
    Cash in Q1 doubled year over year from $123.8m to $246.3m despite a significant revenue quarter in Q1 this year that added $100m to receivable compared to last year and despise an increase in inventory from $141m last year to $289m this year !!!
    Finally still no CAPEX spending out of the $94m they are supposed to spend in 2014 ! I am quite sure that nothing was spent YTD and we are already 5 months in the year, if they were going to spend it they should have had to sign some contracts and make deposits, but none of that is reported, so it certainly didn’t happen yet. Again Q1 is showing how false and misleading their projections are and how unfair their $7.10 offer is, let's hope shareholders will see it and vote NO but if not let's hope a judge will see it as well and find them liable for their actions or I will lose faith in the Justice system in the US and in Nevada in particular.

    Sentiment: Hold

  • Reply to

    GURE Is A Win-Win Deal

    by tradelogic2001 May 12, 2014 3:19 PM
    alan74z alan74z May 12, 2014 4:17 PM Flag

    Whatever people are saying, today was a good day with a high volume 7% of the outstanding shares 12 times the average volume of the last 3 months, the price went up by over 20% at the close but most of the trading was between $2.20 and $2.40. Yes it is also way below its high of a couple of months back when it even went above $3 but again I have a hard time explaining any Chinese stock price movements lately. The only thing I know is that stocks are still able to react positively to good earning reports like this one, that the company is certainly even stronger than it was a few months ago (better diversified with the Chemical Business growing nicely) and that it is by any traditional financial metric way below its value . I am happy I bought back some shares below $2 and like some others here I used a portion of my holding to sell when it is approaching or going above $3 and buy them back when it is at or below $2 and this strategy has been working pretty well twice, we will see if three is the charm as I think there is a strong possibility this stock will test again its 52 week high in the coming months.

    Sentiment: Buy

  • Reply to

    Bromine Up Again

    by lastonestanding000 May 16, 2014 9:27 AM
    alan74z alan74z May 16, 2014 1:07 PM Flag

    Yes I am watching it every day, not sure if it is a mistake or if it really went up, they are showing two customers that went to 19,000 RMB in two days, one Salt Chemicals went from 17,300 RMB to 19,000 RMB, the other Changyi granari is a new one and was not listed in the past, this is the reason for the upside, all other customers seem to have not changed their price yet. Let's wait and see if this is really true and if we see other customers moving up as well but at least it is nice to see that it is not going down anymore. It had been stable at a prices between 16,000 RMB and 17,300 RMB for quite some time, a jump to 19,000 RMB would be a very good sign. If they keep a strong or even stronger Chemical Business and get a higher volume and pricing on Bromine, yes the financial picture would get even a lot better but let's not rush to conclusion after just a one day spike. By the way out of Q1 report, one thing which was very nice was the significant lowering of the Bromine production cost year over year, making any upside price movement even more profitable.

    Sentiment: Buy

  • Reply to

    Bromine Up Again

    by lastonestanding000 May 16, 2014 9:27 AM
    alan74z alan74z May 20, 2014 11:07 AM Flag

    Yes so it seems the price is finally moving up as 2 buyers are now joining the other 2 at 19,000 RMB, they moved from 17,000 RMB to 19,000 RMB (close to 12% increase this is significant), so yes it seems that the pressure up is coming back, let's hope it is the start of a price recovery but it is a good sign finally. Too bad GURE didn't announce a purchase of a Bromine producing facility when prices were so depressed, but let's hope they were in talk and will announce one soon even if I would prefer the purchase of a Chemical production facility as GURE has plenty of unused capacity for Bromine, but long term they will need more for sure and I prefer the money to be invested in reserves/production facilities than sitting in cash earning close to no return.

    Sentiment: Buy

GURE
2.00-0.08(-3.85%)Jul 31 3:59 PMEDT

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