Gulf Resources, Inc.
Q1 2019 Earnings Call Transcript

Published:

  • Operator:
    Good morning, my name is Kael and I will be your conference operator today. At this time, I would like to welcome everyone to the Gulf Resources 2019 First Quarter Earnings Conference Call. All lines will be placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Miss Helen Xu, Director of Investor Relations, you may begin your conference.
  • Helen Xu:
    Hi, thank you operator. And sorry for those of you who are late to this call. We are five minutes late due to the line problem. So, good morning to ladies and gentlemen and good evening to all of those of you who's joining us from China. And we like to welcome all of you to Gulf Resources first quarter 2019 earning conference call. My name is Helen, the IR Director. Our CEO of the company, Mr. Xiaobin Liu will also join this call today. I will be offering translation for his comments and for the company's operating results during the Q&A section as well. I would like to remind you to all of our listeners that in this call, certain management's statements during this call will contain forward-looking information about Gulf Resources Incorporation and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934 and are subject to the Safe Harbor created by those rules. Actual results may differ from those discussed today taking into account a number of risk factors, including, but not limited to the general economic and the business condition in China, future product development and the production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competition from the bromine and other oilfields and the power production chemical, change in technology, the ability to make future bromine assets, and the various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this cautionary statement and the risks factors detailed in the company's reports filed with the SEC. Gulf Resources assumes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Accordingly, our company believes expectation reflecting in those forward-looking statements are reasonable and there can be no assurance of such will prove to be correct. In addition, any reference to company's future performance represents the management's estimates as of today, the 14th of May, 2019. For those of you unable to listen to the entire call at this time, a replay will be available for 14 days at the company's website. The call is also accessible through the webcast and the link is accessible through our website. So, please locate our press release issued early for the details. Xiaobin Liu?
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay. I will do the translation for Xiaobin Liu remarks. He say that, "Hello everyone. Thanks for attending Gulf Resources' 2019 first quarter earnings conference call." So, the company had passed 18 months extremely difficult voyage. A sea of problems but without just missing our date that now we are beginning to get our major facility back in operation. And are very excited about the potentials of our business. Firstly, I will review the financial results summary and to make the call more auditioned, we have received asking questions from many of our investors which we will answer during the second section of this call. At last Mr. Liu the CEO will provide his comments during the question-and-answer section. So, firstly let's look at our financial results. On April 2nd, 2019, our industry has received governmental approval to open bromine factory number seven which is a combination of factories number five and number seven and the subsection factory of number one which is now called factory number four. Each factories had begun operation in April 2019. And during the first quarter of 2019, Gulf Resources commenced trial production at its natural gas in Sichuan Province. And thirdly, despite the lack of operation for most of the past 18 months, a substantial investment in the coming new facilities Gulf Resources ended the quarter of this, cash of approximately $179.7 million which is equivalent to approximately $3.83 per share. The net-net of cash, which is cash minus all liabilities is approximately $163.8 million or approximately $3.49 per share. Working capital of approximately $176.1 million or equivalent to $3.75 per share, shareholders equity of approximately around $295.1 million or equivalent to $6.29 per share. So, now let's look at the second section about expected questions and answer from our shareholders. Now let's look at the bromine and crude salt business segment. Question one
  • Operator:
    [Operator Instructions] We have a question coming from the line of Mick Ross, an Investor. Your line is no open.
  • Mick Ross:
    Hi, thank you very much for your comments. First of all, I'd like to say good job with all the adversity and all the tough times with the regulations and the hurricanes and the storm. So, maybe appreciate that. I wanted to ask whether you ever considered doing buybacks, not that the Chairman would buy our shares but that the company itself would buy shares.
  • Helen Xu:
    Okay, hi Mick Ross and will ask about it from Mr. Liu. [Foreign Language]
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Hi, Mick Ross. Here is the response from Mr. Liu the CEO, coming CEO. He says that the company and do not have the share buyback plan yet. Because you know the company in China where it's located and if he really need a lot of cost to gather back is implement back in production. And other test production it has to do still a lot of work to fix by the government requirements. And you order to make the companies together continuing long-term operation result.
  • Mick Ross:
    So, just to make sure I understood that. You there hasn’t been any focus on this but this is the possibility, the main focus has been on rebuilding the factories and restoring the company back to the operating condition?
  • Helen Xu:
    Yes. The main focus is still here and there is no current playing it on the buyback from company side.
  • Mick Ross:
    Okay. And would you guys consider something like this because potentially this could give a lot more value to shareholders, then one more factory here or on less factory?
  • Helen Xu:
    Okay.
  • Mick Ross:
    I mean, the share there extremely --.
  • Helen Xu:
    Okay. I got your points I think. [Foreign Language]
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay. Hi, Mick Ross. So, we understand that the company's shares are being really undervalued. And we think when the company's operation stuck and the way it have a consistence to long-term bromine production, then we will can figure about it; the shares buyback.
  • Mick Ross:
    I see. I mean, I will mention this that well operations are extremely important. By the time operations are back, then the opportunity in the stock price will probably hopefully not be there. In other words, when operations are back, when profits are back, when sales are back. When all that's back, then price of the shares hopefully will rise eventually. I don’t really care if it's next quarter or next year but eventually it'll get there. But right now there is an opportunity in buying the shares on the cheap and you definitely have enough cash.
  • Helen Xu:
    Well, that’s it as we just now. First, explain that there are still a lot of places during the rectification or during the government's requirements which meet some, we have to go.
  • Mick Ross:
    Say again, sorry?
  • Helen Xu:
    I say as we explained at the beginning of this question, we say that there are still lot of places still needs lot of plans to get back the company in operation because the rectification and maybe governments had some method. New requirements we had to do and the natural gas as well.
  • Mick Ross:
    So, as far as I thought we --.
  • Helen Xu:
    We thought we could catch that some effect --.
  • Mick Ross:
    Sorry, go ahead.
  • Helen Xu:
    Okay. In order to get back the companies to sustainable operation not have a belief, they are still needs funds. So, that's why we can we should be conservative and should be careful in spending the fund.
  • Mick Ross:
    Absolutely. The care and step-by-step is definitely a strong selling point. Can you just more-or-less tell me how much you I mean I thought we estimates of $60 million to $70 million to get back to get operations back. Is that not the case?
  • Helen Xu:
    Okay. During the six year spends in there from now or total?
  • Mick Ross:
    I thought it was total but maybe a bit easy on the details.
  • Helen Xu:
    Okay.
  • Mick Ross:
    Could you tell me if I remember correctly, there is around a $169 million left in cash?
  • Helen Xu:
    Okay. [Foreign Language]
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay.
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay. Hi Mick Ross, I do not have that cash which is $179 million and a 79.7 --.
  • Mick Ross:
    Seventy nine, okay. And -- sorry, go ahead.
  • Helen Xu:
    Yes. And Mr. Liu just now did explain that there are two major path which needs cash too. Firstly, we want to gather all of our bromine factories, chemical factories and crude salt and backing operation; all of these. And especially now we are as we said we are at time for the natural gas certificates to clear for more wells. And to have a corporate with the governments. So, once we get that, we don’t have a new budget before later; how much we have to spend on natural gas or well.
  • Mick Ross:
    Okay. So, could you break it down for what you estimate the cost being for the crude salt, bromine, all the factories reopening, recertifying from this point until getting it all back to operations; that's question number one. And question number two is the natural gas part of it; how much you would have to spend on that part.
  • Helen Xu:
    [Foreign Language]
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay. Hi, Mick Ross. I think all these packets we have disclosed previously in our queue or press release is because we have to go back check it and if you all need it I can e-mail you. You can send me your e-mail address, I'll forward all those information to you. Okay?
  • Mick Ross:
    Okay. So, you'll send me that information and then we'll follow-up from there.
  • Helen Xu:
    Okay, thank you. Yes, you'll e-mail me, I'll get your e-mail checked.
  • Mick Ross:
    Okay. What's the e-mail address just so I have it on record?
  • Helen Xu:
    You may check on my press release. It's beishengrong@vip.163.com. "B-E-I-S-H-E-N-G-R-O-N-G."
  • Mick Ross:
    Okay. I'll get the exact e-mail from the protocol of the conversation. I think that concludes my questions for today.
  • Helen Xu:
    Yes. Okay, thank you. Have a good day.
  • Mick Ross:
    Thank you, very much.
  • Xiaobin Liu:
    Thank you.
  • Helen Xu:
    Welcome. Hi, operator. Is there any other question?
  • Operator:
    [Operator Instructions] There are no question at this time, please continue.
  • Helen Xu:
    [Foreign Language]
  • Xiaobin Liu:
    [Foreign Language]
  • Helen Xu:
    Okay, hi operator. If there is no more question, can we close the call for today?
  • Operator:
    Alright. This concludes today's conference call, you may now disconnect.
  • Helen Xu:
    Okay, thank you.
  • Operator:
    You're welcome, have a great day there.
  • Xiaobin Liu:
    Thank you, there.
  • Helen Xu:
    Okay, thank you.

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