http://www.equitiesmagazine.com/overview_gulf.php
Top Investment Highlights
Gulf Resources is one of six companies in China’s Shandong Province that has been granted a license to exploit bromine, necessary to both produce and distribute this valuable product domestically.
Government authorities have halted additional bromine exploration by refusing to issue new licenses while shutting down unlicensed facilities, giving Gulf Resources an opportunity to capitalize on its prime location, proven reserves and valid license.
Gulf Resources maintains property rights on over 58 square kilometers (14,300 acres) of land containing over 1.2 million tons of proven reserves.
Bromine, original salt and other chemical products manufactured by Gulf Resources and its subsidiaries address several emerging markets, including multiple industrial and agricultural applications.
Bromine sales worldwide are currently $1.24 billion, with approximately $290 million emanating from China, which is currently a net importer.
Shouguang City Hao Yuan Chemical Industry Co., Gulf’s valuable subsidiary, is one of the largest bromine producers in China with over 10% market share.
Shouguang Yu Xin Chemical Industry Co., another of Gulf’s subsidiaries, produces chemical products utilized in the oil and paper making industries, two established markets with consistent growth.
The company is strengthening its R&D efforts and becoming vertically integrated by developing environmentally friendly products to meet the world’s increasing demand for eco-conscious products and services.
30 percent of Gulf’s management team is comprised of key senior technical workers with a wealth of experience in the industry; collectively, they have developed a portfolio of over 30 types of chemical products.
Corporate Overview
Based in Shandong, China, Gulf Resources is a leading provider of specialty chemical products through its wholly owned subsidiaries, Shouguang City Hao Yuan Chemical Industry Co. Ltd. (SCHC) and Shouguang Yu Xin Chemical Industry Ltd. (SYCI). SCHC produces and distributes bromine and crude salt, which are currently experiencing high demand from both established and emerging markets worldwide due to strong industrial growth. SCHC is one of only six producers in the province and the largest bromine producer in the PRC. In addition to organic growth, SCHC is pursuing acquisitions of unlicensed properties with proven bromine reserves to enhance future profitability. The Company’s second subsidiary, SYCI, is a producer of chemical products utilized in oilfield exploration and distribution, wastewater processing and papermaking. Together the operations form Gulf Resources, a company with a diversified customer base, broad product portfolio and a stable platform for future growth and profits.
Company History
In December 2006, Gulf Resources acquired Shouguang City Hao Yuan Chemical Industry (SCHC) and, in February 2007, acquired Shouguang Yu Xin Chemical Industry (SYCI). Shortly after the acquisition of SYCI, Gulf Resources acquired the Shouguang City Qinshuibo Area, which included a 50-year mineral rights and land lease covering 1,846 acres of property with probable reserves of approximately 223,000 tons of bromine yielding approximately 4,500 tons of production annually. In May of 2007, SYCI signed a long-term agreement with Huaneng Yimin Power Plant for its proprietary, environmentally friendly biocide product utilized in power generation, solidifying its entry into an established and growing market opportunity. In June 2007, SCHC acquired Dong Ying City Liu Hu bromine area which included a 50-year mineral rights and land lease covering 2,318 acres of property with probable reserves of approximately 235,000 tons of bromine yielding approximately 3,700 tons of production annually.
Bromine: The Multi-Purpose Element with a Booming Market
Contained in underground halogen water, bromine is easily extractable and highly volatile. In its elemental form bromine is used to manufacture a wide variety of compounds in industrial and agricultural applications. Its use is common in paper, dyes, fire retardants, insect repellants, photographic chemicals, water-treatment chemical, and sanitizers.
China is net importer of bromine, with more than 130,000 tons produced in 2006 to meet the 2006 total domestic demand of 160,000 tons. Overall demand has increased by 200% in recent years, with the price of bromine increasing by 100% over the past 10 years. The prices for bromine-based flame retardants have increased 25% year over year.
Gulf’s subsidiaries also produce original salt, an elementary material used primarily in the chemical industry. Original salt is the major material in alkali and chlorine alkali production and is widely used in the manufacturing of paper.
Gulf Resources: Two Valuable Subsidiaries
Shouguang City Hao Yuan Chemical Industry Co. Ltd. (SCHC)
With over 10% market share, SCHC is one of the largest bromine producers in China. All key industry participants are located in the Shandong Province, where approximately 90% of all domestic bromine production occurs. Current annual bromine production is estimated to be 19,000 tons, with proven reserves of 1.2 million tons. The Company’s key growth strategy is to acquire adjacent unlicensed and undercapitalized properties with proven bromine reserves, which are then consolidated into current operations. Once acquired, improvements are made to increase production output, streamline distribution and leverage economies of scale, which is expected to drive incremental revenue growth and enhance future profitability.
Shouguang Yu Xin Chemical Industry Co. Ltd. (SYCI)
This Gulf subsidiary produces and distributes over 30 chemical products utilized in oil and gas field explorations and the paper making industry. The company is a Class One supplier for both China Petroleum and Chemical Corporation (SINOPEC) and China National Petroleum Corporation (CNPC). The recent product introduction includes the first environmentally friendly biocide product for power generation companies and presents a significant growth opportunity.
Financial Overview
Gulf Resources second quarter 2007 earnings showed an increase of 58% to $12.4 million, yielding $0.06 in EPS. The first six months of 2007 saw revenues of $22.5 million, a 47% increase over the previous year. Net income was $5.7 million and EPS was $0.12 in the first half of 2007.
As stated in its 2007 financial guidance, management expects revenues to increase 170% to $48 million with net income of $11.6 million, including the $16 million in revenues from the acquisition of SYCI in February. Gulf Resources has identified several additional bromine acquisition targets in close proximity to its current properties from which an acquisition would complement the company’s future growth.
Growth Strategy
Currently, the primary focus for Gulf Resources is to make strategic bromine acquisitions while increasing its production output capacity. Because bromine is contained in halogen water, which is both easy and cost-effective to extract, the company will continue to increase the extraction of halogen water while increasing its overall processing capacity. Gulf will also strengthen its R&D efforts by developing environmentally friendly products to meet market demand. It will simultaneously improve the quality of its product portfolio, including paper making chemicals, power generation and pesticides. As higher quality, eco-conscious products and services rapidly gain consumer attention and political pressures increase, Gulf will be well positioned to capitalize.
In addition to adding an eco-conscious agenda to its manufacturing process and product portfolio, the company will continue to strengthen its role in local markets and begin to develop a presence in international markets. China currently consumes all of the bromine produced domestically and is a net importer. However, the country’s total demand represents only 20% of worldwide use, which allows Gulf Resources to target larger, well-established markets internationally for future growth.
Management
Mr. Ming Yang
CEO & Director
Mr. Yang was appointed to chairman and general manager of Shouguang Qinghe Shiye LLC in 1997, and during the next three years its profits doubled. He then took the position of general manager of Shouguang City Yu Xin Chemical Industry Co., Ltd. in 2000, where his foucs on quality management and technology progress led to a 100% success rate of all products. He also helped the company successfully pass the ISO certification and become a private high-tech enterprise. In 2005, he was appointed to the position of chairman, where he has helped the company to become a leading producer of bromine and crude salt in China. In 2006 he became the chairman of Gulf Resources, Inc. Mr. Yang has been the representative of Shandong Shouguang congress since 1995 and in 1998 he was awarded as Honorary Entrepreneur in Weifang City. In 2002 he was honored as one of the ten outstanding youth in Shouguang
Mr. Min Li
CFO
Mr. Li became the manager of the accounting department in Shouguang Yu Xin Chemical Industry Co., Ltd. in 2004, and in 2006 was appointed to the role of CFO of Gulf Resources, Inc. He has helped implement effective cost controls while efficiently increasing the use of capital.
Mr. Naihui Miao
Director Secretary and Vice President
From 2005 to 2006, Mr. Miao served as Vice President of Shouguang City Yuxin Chemical Company Limited and as the deputy general manager. In 2005, he sucessfully developed the sales market of Talimu oil Field. Since January 2006, Mr. Miao has served as Director Secretary and Vice President of Gulf Resources, Inc. he is in charge of sales, human resource and business management.
Top Investment Highlights
Gulf Resources is one of six companies in China’s Shandong Province that has been granted a license to exploit bromine, necessary to both produce and distribute this valuable product domestically.
Government authorities have halted additional bromine exploration by refusing to issue new licenses while shutting down unlicensed facilities, giving Gulf Resources an opportunity to capitalize on its prime location, proven reserves and valid license.
Gulf Resources maintains property rights on over 58 square kilometers (14,300 acres) of land containing over 1.2 million tons of proven reserves.
Bromine, original salt and other chemical products manufactured by Gulf Resources and its subsidiaries address several emerging markets, including multiple industrial and agricultural applications.
Bromine sales worldwide are currently $1.24 billion, with approximately $290 million emanating from China, which is currently a net importer.
Shouguang City Hao Yuan Chemical Industry Co., Gulf’s valuable subsidiary, is one of the largest bromine producers in China with over 10% market share.
Shouguang Yu Xin Chemical Industry Co., another of Gulf’s subsidiaries, produces chemical products utilized in the oil and paper making industries, two established markets with consistent growth.
The company is strengthening its R&D efforts and becoming vertically integrated by developing environmentally friendly products to meet the world’s increasing demand for eco-conscious products and services.
30 percent of Gulf’s management team is comprised of key senior technical workers with a wealth of experience in the industry; collectively, they have developed a portfolio of over 30 types of chemical products.
Corporate Overview
Based in Shandong, China, Gulf Resources is a leading provider of specialty chemical products through its wholly owned subsidiaries, Shouguang City Hao Yuan Chemical Industry Co. Ltd. (SCHC) and Shouguang Yu Xin Chemical Industry Ltd. (SYCI). SCHC produces and distributes bromine and crude salt, which are currently experiencing high demand from both established and emerging markets worldwide due to strong industrial growth. SCHC is one of only six producers in the province and the largest bromine producer in the PRC. In addition to organic growth, SCHC is pursuing acquisitions of unlicensed properties with proven bromine reserves to enhance future profitability. The Company’s second subsidiary, SYCI, is a producer of chemical products utilized in oilfield exploration and distribution, wastewater processing and papermaking. Together the operations form Gulf Resources, a company with a diversified customer base, broad product portfolio and a stable platform for future growth and profits.
Company History
In December 2006, Gulf Resources acquired Shouguang City Hao Yuan Chemical Industry (SCHC) and, in February 2007, acquired Shouguang Yu Xin Chemical Industry (SYCI). Shortly after the acquisition of SYCI, Gulf Resources acquired the Shouguang City Qinshuibo Area, which included a 50-year mineral rights and land lease covering 1,846 acres of property with probable reserves of approximately 223,000 tons of bromine yielding approximately 4,500 tons of production annually. In May of 2007, SYCI signed a long-term agreement with Huaneng Yimin Power Plant for its proprietary, environmentally friendly biocide product utilized in power generation, solidifying its entry into an established and growing market opportunity. In June 2007, SCHC acquired Dong Ying City Liu Hu bromine area which included a 50-year mineral rights and land lease covering 2,318 acres of property with probable reserves of approximately 235,000 tons of bromine yielding approximately 3,700 tons of production annually.
Bromine: The Multi-Purpose Element with a Booming Market
Contained in underground halogen water, bromine is easily extractable and highly volatile. In its elemental form bromine is used to manufacture a wide variety of compounds in industrial and agricultural applications. Its use is common in paper, dyes, fire retardants, insect repellants, photographic chemicals, water-treatment chemical, and sanitizers.
China is net importer of bromine, with more than 130,000 tons produced in 2006 to meet the 2006 total domestic demand of 160,000 tons. Overall demand has increased by 200% in recent years, with the price of bromine increasing by 100% over the past 10 years. The prices for bromine-based flame retardants have increased 25% year over year.
Gulf’s subsidiaries also produce original salt, an elementary material used primarily in the chemical industry. Original salt is the major material in alkali and chlorine alkali production and is widely used in the manufacturing of paper.
Gulf Resources: Two Valuable Subsidiaries
Shouguang City Hao Yuan Chemical Industry Co. Ltd. (SCHC)
With over 10% market share, SCHC is one of the largest bromine producers in China. All key industry participants are located in the Shandong Province, where approximately 90% of all domestic bromine production occurs. Current annual bromine production is estimated to be 19,000 tons, with proven reserves of 1.2 million tons. The Company’s key growth strategy is to acquire adjacent unlicensed and undercapitalized properties with proven bromine reserves, which are then consolidated into current operations. Once acquired, improvements are made to increase production output, streamline distribution and leverage economies of scale, which is expected to drive incremental revenue growth and enhance future profitability.
Shouguang Yu Xin Chemical Industry Co. Ltd. (SYCI)
This Gulf subsidiary produces and distributes over 30 chemical products utilized in oil and gas field explorations and the paper making industry. The company is a Class One supplier for both China Petroleum and Chemical Corporation (SINOPEC) and China National Petroleum Corporation (CNPC). The recent product introduction includes the first environmentally friendly biocide product for power generation companies and presents a significant growth opportunity.
Financial Overview
Gulf Resources second quarter 2007 earnings showed an increase of 58% to $12.4 million, yielding $0.06 in EPS. The first six months of 2007 saw revenues of $22.5 million, a 47% increase over the previous year. Net income was $5.7 million and EPS was $0.12 in the first half of 2007.
As stated in its 2007 financial guidance, management expects revenues to increase 170% to $48 million with net income of $11.6 million, including the $16 million in revenues from the acquisition of SYCI in February. Gulf Resources has identified several additional bromine acquisition targets in close proximity to its current properties from which an acquisition would complement the company’s future growth.
Growth Strategy
Currently, the primary focus for Gulf Resources is to make strategic bromine acquisitions while increasing its production output capacity. Because bromine is contained in halogen water, which is both easy and cost-effective to extract, the company will continue to increase the extraction of halogen water while increasing its overall processing capacity. Gulf will also strengthen its R&D efforts by developing environmentally friendly products to meet market demand. It will simultaneously improve the quality of its product portfolio, including paper making chemicals, power generation and pesticides. As higher quality, eco-conscious products and services rapidly gain consumer attention and political pressures increase, Gulf will be well positioned to capitalize.
In addition to adding an eco-conscious agenda to its manufacturing process and product portfolio, the company will continue to strengthen its role in local markets and begin to develop a presence in international markets. China currently consumes all of the bromine produced domestically and is a net importer. However, the country’s total demand represents only 20% of worldwide use, which allows Gulf Resources to target larger, well-established markets internationally for future growth.
Management
Mr. Ming Yang
CEO & Director
Mr. Yang was appointed to chairman and general manager of Shouguang Qinghe Shiye LLC in 1997, and during the next three years its profits doubled. He then took the position of general manager of Shouguang City Yu Xin Chemical Industry Co., Ltd. in 2000, where his foucs on quality management and technology progress led to a 100% success rate of all products. He also helped the company successfully pass the ISO certification and become a private high-tech enterprise. In 2005, he was appointed to the position of chairman, where he has helped the company to become a leading producer of bromine and crude salt in China. In 2006 he became the chairman of Gulf Resources, Inc. Mr. Yang has been the representative of Shandong Shouguang congress since 1995 and in 1998 he was awarded as Honorary Entrepreneur in Weifang City. In 2002 he was honored as one of the ten outstanding youth in Shouguang
Mr. Min Li
CFO
Mr. Li became the manager of the accounting department in Shouguang Yu Xin Chemical Industry Co., Ltd. in 2004, and in 2006 was appointed to the role of CFO of Gulf Resources, Inc. He has helped implement effective cost controls while efficiently increasing the use of capital.
Mr. Naihui Miao
Director Secretary and Vice President
From 2005 to 2006, Mr. Miao served as Vice President of Shouguang City Yuxin Chemical Company Limited and as the deputy general manager. In 2005, he sucessfully developed the sales market of Talimu oil Field. Since January 2006, Mr. Miao has served as Director Secretary and Vice President of Gulf Resources, Inc. he is in charge of sales, human resource and business management.
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