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SINO CLEAN ENERGY Message Board

alan74z 53 posts  |  Last Activity: Jun 20, 2016 9:22 PM Member since: Feb 2, 1999
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  • 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

    Is everyone a nervous as I am?

    by shabamoon Jun 20, 2016 9:14 AM
    alan74z alan74z Jun 20, 2016 12:29 PM Flag

    Yes I am now used to the bankruptcy court system and one thing that I learned is never expect a quick ruling, it can happen in some rare cases but usually the judge wants to make sure that he/she has reviewed all information and arguments of the opposing parties fully before coming up with a final order, so it is extremely certain that the final order will not be issued this week, certainly not before end of June/early July but again there are a few cases where the judge went fast but this is the exception. Don't forget that the Term lenders can/will file for an appeal and if they do, the judge has to make sure he/she did everything the right way, so he/she will be very cautious before issuing an order.
    I am also in the camp who believes the bankruptcy will be approved as if it is not and the judge gives reason to the term lenders this would mean that a viable company under the bankruptcy reorganization has to be liquidated and the NE Mexican tax deal would also collapse as tied to the bankruptcy. I do not think a judge would want this especially if like now the oil Business environment seems to have gone through its worse period and is in recovery mode. It would not be in the interest of all other parties excepted for the term loan investors who would get their money back early instead of in 2021 but don't forget that under the current bankruptcy plan they will get full payment of the interests and payment of 100% of the capital in 2021 as in the original contract signed 2 years ago.....

    Sentiment: Strong Buy

  • I do hope PGN lawyers will add the latest IEA report to their presentation to the judge as it will reinforce what they projected in their financials. I read all the court filings and I also am in the camp of those who believe that the Bankruptcy will be approved by the judge, I do not expect a decision on June 21st as the hearing is two days and there are a lot of items to cover but there could be a decision on the 23rd or soon after. The main argument of the term lenders is that the financial projections are not realist and that the creditors would be better of if the company was liquidated as it is not viable. After a Q1 that was better than they had anticipated in their financial projections, after a recovery of the oil prices since the first part of the year and now with reports talking about demand and supply balancing in 2017 or even demand exceeding supplies unless OPEC production is increased significantly like in this IEA report, I think that the assumptions of PGN and their experts that we can expect a recovery in the offshore Business PGN is in by 2019 is even conservative. Anyway if you are the judge, you have one party that in fact is not impacted by this restructuring and is still getting 100% of what they had before the restructuring and want the a still viable company liquidated and when the largest creditors are willing to take the risk with an equity position to not be paid in full if the company doesn't perform as planned, I would find it hard for a judge to reject the plan and agree with the term loan creditors to liquidate the company, not in light of the current performance of the company (FY 2015 and Q1 2016) and not in light of the expert reports projecting an improvement in the oil market in potentially less than a year. So yes the judge will approve it, could ask for some small adjustments but my feeling is that it will be approved pretty close to what is proposed by the company. Again my opinion after going through the court filings.

    Sentiment: Strong Buy

  • Reply to

    Questions for GURE management

    by jjnoname May 21, 2016 11:45 PM
    alan74z alan74z Jun 16, 2016 11:24 AM Flag

    and one more thing, any question you ask cannot be a question about key unreported financials or key action that they cannot share with one single person but have to share will all investors as they could be in trouble with the SEC if they selectively shared with a few investors some key data or action item. For example you can ask them when they are planning to issue a guidance but not what is their guidance, or with regard to the NG project you can ask when they will be able to provide some inputs on what is going on but not details of what is going on. I am sure you are aware of these rules but wanted to mention it just in case.

    Sentiment: Strong Buy

  • Reply to

    Questions for GURE management

    by jjnoname May 21, 2016 11:45 PM
    alan74z alan74z Jun 16, 2016 11:15 AM Flag

    Yes I must say that they have always been responsive to me, and yes once it was pretty late in the evening their time when they did but I do not expect it to be always the case. I must say too that I do not send them too often a question, usually more around quarter end and yes there are times when it takes some time to get an answer but other times when I get it right away so no real rule.

    Sentiment: Strong Buy

  • Prices have come down now below 25,000 RMB/ton, still relatively high but the trend is down, not that the price of Bromine seems to have an impact on the stock price in fact lately the stock has been going down when the price of Bromine went up and is now up when it is coming down, doesn't make any sense but showing that the stock price has nothing to do with the financials of the company !!! Curious to find out if the price is coming down because of lower demand or because of higher production. Remember also that starting end of July the production will be reduced in some producing areas close to Shanghai because of the G20 meeting in September and the desire of the authorities to reduce pollution, this could have an impact on supply and could at least ensure prices do not go down any further.

    Sentiment: Strong Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 6, 2016 12:01 AM Flag

    I never saw this as an attack on 'Insider' but just a discussion on where the stock price could be heading after the company emerges from bankruptcy, I agree that the market will determine what the price will be and the market is difficult to predict but overall I share the feeling that this stock has plenty of room to grow, so I do not see a disagreement, how high no one knows. Still the main element that will drive the stock up or down is the overall offshore drilling market, I still recommend people to look again at the filing of March 25 to better understand the projections of the company in term of performance in the coming 3 years after this bankruptcy reorg. So yes I will give it a rest in fact I will go back to being a silent investor on this board and keep my analyses or comments to myself. Good luck too.

    Sentiment: Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 5, 2016 9:40 PM Flag

    My discussion was around net book value not market value, you are talking market value based on the financial projections of the company. The March 25th filing has not been updated and the income statement projections, the balance sheet projections and the cash flow projections are still the same and this is what has been used by the "experts" to come to this estimated market value. Yes I was wrong to assume a book value of $742m when in fact at the time of the exit from the bankruptcy it is projected to be at $23m (june 2016) but I also admit that using book value to come up with a potential stock price when comparing to similar companies is not valid in this case. So yes I was wrong ! At the same time Market value incorporates elements like balance sheet and free cash flow over the next few years and again it reflects the financial statement projections the company filed on March 25th , I do hope the financial projections will materialize and I agree that if they do, the company could be worth north of $742m or $5.5+ per share but because of the uncertainty around those projections, uncertainty related to the offshore drilling market recovery in 2017 assumed in those projections, because of these uncertainties I do not expect the stock price to reach $5.5 until we see such a recovery, I would be happy if the stock price reached $2 when the company emerges from bankruptcy hopefully in Q3 2016....

    Sentiment: Buy

  • Reply to

    pre pak

    by squeez62 Jun 4, 2016 3:51 PM
    alan74z alan74z Jun 5, 2016 11:37 AM Flag

    I think we are both wrong and that using book value to predict potential share price is not applying in this case, I had taken the $742m as the book value of a reorganized PGN but it was more an estimate of the economic value of the company not the book value, in their filing 8K on March 25th when the company presented the financial projection of a reorganized company after the bankruptcy they presented the following numbers: 2015 shareholder equity - m$ 506 which after the reorganization would become in June 2016 $23m but given the company will still generate some net losses in 2016 it would end the year at - 139m and only start becoming positive again in 2018. I was wrong using book value to come up with a potential valuation of the share as it definitely doesn't work, and the economic value is perhaps the best estimate of the long term true value of the company but questions remain on first will they deliver on the projections that they presented in this March 25th filing and if they do what is long term, a year, two years or more. Of course the most significant element in all this is when will the offshore drilling market start recovering. So frankly right now I have no clue of what the stock price could be when the company emerges from the bankruptcy, I think it should be higher than it is today but no clue how high.

    Sentiment: 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

    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

  • Reply to

    FYI ...

    by gr0operator Jun 1, 2016 2:32 PM
    alan74z alan74z Jun 3, 2016 2:33 PM Flag

    I hate when people spread some fake information, as a presidential candidate does !
    Saudi has at the current production rate over 70 years of proven oil reserves (they have 16% of the worldwide known reserves), so they are not out by the end of the decade, yes by the end of this century they could. As for the US which has only 12 years of proven reserves given the current daily production volume (2.2% of the worldwide proven reserves). By the way Syria and Yemen are not considered as significant oil producers, together they have 2% of the oil reserves of the Saudi and less than India or Vietnam !!!! These are 2015 numbers so include the shale oil proven reserves as well.

  • Reply to

    earning guidance

    by alan74z May 18, 2016 11:24 AM
    alan74z alan74z May 20, 2016 4:23 PM Flag

    Fully agree a cash acquisition outside of China of a compelling Chemical Business would be a major positive development for the company and certainly for the stock price.

    Sentiment: Strong Buy

  • Reply to

    earning guidance

    by alan74z May 18, 2016 11:24 AM
    alan74z alan74z May 19, 2016 11:20 PM Flag

    just one precision, they said: "These projections also assume that there will be costs but no revenues associated with the natural gas drilling project in Sichuan. Once drilling has begun, Gulf Resources will update these projections", this means that they have not included any revenue but only the costs of the drilling project but yes when/if NG or Bromine is produced, then there will be revenues and they will update their guidance upwards accordingly, it will not vanish in thin air or be given away lol
    As for the cost associated with this drilling, as someone had indicated it could be in the range of $300-$500K a quarter so no more than $2m for the year, yes my initial number was too high. I also agree that the $25m invested to improve the Bromine facilities seems high given the current low utilization rate but I also know that they are like all Bromine producers monitored for the impact they have on the environment and some producers if they do not improve their facilities could see their license revoked, so they perhaps have no choice but to do it but I am just guessing, I do not think they would spend the money of they didn't need to as they will need the cash for Daying county

    Sentiment: Strong Buy

  • Reply to

    New CEO Letter

    by yorgental2004 May 16, 2016 8:02 AM
    alan74z alan74z May 18, 2016 11:30 AM Flag

    excellent I had missed this thank you, now their Bromine production makes sense as well as the price of Bromine increase

    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

  • alan74z by alan74z May 18, 2016 11:24 AM Flag

    Here is my take on the earning guidance. The weakness of the Chemical Business in Q1 will continue based on this guidance for the rest of the year, so I expect the Chemical Business and revenues to be down year over year as obviously the Bromine revenues and profit will be up and more than make up for it. However I do not expect any significant increase in volume sold of Bromine so they will continue keep volume flat or slightly down to favor higher prices/margin. Now the big unknown in these numbers is how much will they spend on the Sichuan/Daying county project as they say this guidance includes spending but no revenue for this project. Their guidance come to between $0.75 and $0.78/share but how much will they spend on the project. Given their revenue guidance and EPS guidance and after Q1 and Q2 projection when they should not have spent much on the project, my guess that spending in Q3 and Q4 is not going to be huge at least in this projection, certainly not more than $5 or $10m at most, so excluding this spending EPS projection would have been $0.08 to $0.15 higher at most, so between $0.83 and $0.93/share. We should ask them at the next conf call what assumption they have for spending on the project in their guidance. Overall hopefully a conservative guidance that they can beat but a guidance confirming for me the weakness of the Chemical Business revenue wise (but not margin wise) and the continuing low capacity utilization of the Bromine business that should see little volume increase but significant margin improvement year over year.

    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

    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

  • 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

SCEI
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