Gulf Resources, Inc. (NASDAQ:GURE) ("Gulf Resources" or the
"Company"), a leading manufacturer of bromine, crude salt and
specialty chemical products in China today is updating investors as
to its estimates for revenues and profits for the 3rd quarter and
the full year of 2022 for its Bromine and Crude Salt Segments only
based on Non-Generally Accepted Accounting Principle (Non-GAAP).
The Company is also providing a preliminary overview of 2023 for
these two segments.
Before reviewing the projections, the Company advises investors
that these estimates were based on its assumptions at this time,
also do not include unexpected nonrecurring and non-operational
factors, any impairments and write-offs which our auditors may
recommend. Market conditions impacting the price and the demand for
our products can change at any time. The Chinese economy has
softened, which could impact demand and pricing.
COVID continues to be a serious problem in China. The Company
has no visibility as to when this epidemic will abate. If COVID
spreads further, the Chinese government could increase its
inspections of our facilities, which also could impact our
production.
In addition, China has been impacted by serious heatwaves and
one of the worst droughts in a century. The drought has caused
limited hydropower and the increased demand has caused the cutback
in electricity and forced the closing of factories in certain parts
of the country. These closures could also impact demand and
pricing.
The government in Shandong Province could force us to close our
operating factories, as it did last winter. In 2023, Chinese New
Year falls on January 22, 2023,10 days earlier than it fell in 2022
and 21 days earlier than it fell in 2021. The seasonal closings are
(not as) usually about 58 days from the end of Chinese New
Year.
While the Company does not know if the government intends to
have a seasonal closing in 2022-3, its projections for the 4th
quarter assume that the government will force our facilities to
close in early to mid December 2022. Should these closings occur,
4th quarter 2022 sales and earnings may be impacted negatively,
while first quarter 2023 earnings may be impacted positively.
Further, because our crude salt business was recently split off
from our bromine business, the results of these two segments in our
financial statements will not be strictly comparable. Bromine is
now incurring a larger share of operating costs, which have lowered
its profits and raised those of crude salt in comparison with the
reported results in 2021 and the first quarter of 2022.
The projections below are for the bromine and crude salt
segments only in 2022. They include allocations of corporate cost
but do not include public company costs, and do not include the
losses from chemicals and natural gas or income taxes. All
projections for the third and fourth quarters assume a currency
Exchange Rate ( RMB/US$=6.8065).
The estimates also do not assume any stock grants for management
in 2022. It is possible there will be some grants in 2022. If
grants are awarded, they will be lower than those in 2021.
Projections for Bromine and Crude Salt
Segments
- Third Quarter Ending 9/30/2022
For the third quarter ending 9/30/2022, the bromine and crude
salt segments are projected to generate revenues of approximately
$20.0 million to $21.8 million, an increase of approximately 12.4%
to 22.5% from that of the previous year. Profit before income tax
is expected to be approximately $ 9.0 million to $10.3 million, an
increase of approximately 20.0% to 37.3% from that in the previous
year.
|
Q3 2022($Million) |
Q3 2021($ Million) |
% of change |
Revenue |
20.0-21.8 |
17.8 |
12.4%-22.5% |
Profit Before income Tax |
9.0-10.3 |
7.5 |
20.0%-37.3% |
- Full Year Ending 12/31/2022
For the full year ending 12/31/2022, the bromine and crude salt
segments are projected to generate revenues of approximately $62.0
million to $63.7 million, an increase of approximately 12.7% to
15.8% from that of the previous year. The Company estimates that
there will be fewer days of operation in the fourth quarter 2022 as
compared to last year due to the earlier Chinese New Year. In
addition, because of the current softness in the Chinese economy
and for purposes of conservatism, the Company is assuming the
selling pricing in the fourth quarter of 2022 will be below the
fourth quarter of 2021. Profit before income tax is projected to be
approximately $20.0 million to $21.5 million, an increase of 63.9%
to 76.2% from that in the previous year.
|
2022($Million) |
2021($Million) |
% of change |
Revenue |
62.0-63.7 |
55.0 |
12.7%-15.8% |
Profit Before income Tax |
20.0-21.5 |
12.2 |
63.9-76.2% |
2023 and Beyond
Based on information currently at hand, revenues and earnings in
2023 for bromine and crude salt segments are projected to increase
from the estimates in 2022.
The Company currently believes that 2023 will benefit from:
- The production of factory #8, which may add approximately by
20% to annual production capacity of operating factories at this
time.
- More days of additional production. With Chinese New Year
coming earlier in 2023 (Feb. 01, 2022 vs. Jan 22, 2023, there will
be more production days in the first quarter, and with Chinese New
Year coming later in 2024 (Jan, 24, 2023 vs. Feb. 10, 2024) there
should be more production days in the 4th quarter.
- Fewer closings for inspections as if COVID is expected to abate
somewhat.
- Continued strength in pricing, as the closure of many factories
has lowered supply, while the decline of the RMB versus the USD and
other currencies has made imports more expensive.
- The Company also believes it may get permission to open another
factory in 2023, but this factory is not included in these
projections.
6-Year Plan
The Company is currently reviewing the projections for the
6-year plan for bromine and crude salt on June 14,2022. At the
present time, the Company expects revenues and profits may continue
to increase on an annual basis. The capital investments made in our
bromine operation should help us maintain or even slightly increase
our utilization. Certain of our closed factories could be allowed
to resume operations by the government. However, given the
uncertainties related to COVID -19 and the economy of China, the
Company is continuing the review and may revise the 6-Year Plan and
will provide them to investors as the situation become clearer.
About Gulf Resources, Inc.Gulf Resources, Inc. operates through
four wholly-owned subsidiaries, Shouguang City Haoyuan Chemical
Company Limited ("SCHC"), ShouguangYuxin Chemical Industry Co.,
Limited ("SYCI"), Daying County Haoyuan Chemical Company Limited
(“DCHC”) and Shouguang Hengde Salt Industry Co. Ltd. (“SHSI”). The
Company believes that it is one of the largest producers of bromine
in China. Elemental Bromine is used to manufacture a wide variety
of compounds utilized in industry and agriculture. Through SYCI,
the Company manufactures chemical products utilized in a variety of
applications, including oil and gas field explorations and
papermaking chemical agents, and materials for human and animal
antibiotics. Through SHSI, the Company manufactures and sell crude
salt. DCHC was established to further explore and develop natural
gas and brine resources (including bromine and crude salt) in
China. For more information, visit www.gulfresourcesinc.com.
Forward-Looking Statements
Certain statements in this news release contain forward-looking
information about Gulf Resources 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. The actual
results may differ materially depending on a number of risk factors
including, but not limited to, the general economic and business
conditions in the PRC, the risks associated with the ongoing impact
of COVID-19 pandemic, uncertainties associated with the winter
closings, obtaining governmental approvals, future product
development and production capabilities, shipments to end
customers, market acceptance of new and existing products,
additional competition from existing and new competitors for
bromine and other oilfield and power production chemicals, changes
in technology, the ability to make future bromine asset purchases,
and 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 Securities and Exchange
Commission. Gulf Resources undertakes no duty to revise or update
any forward-looking statements to reflect events or circumstances
after the date of this release.
Web: |
http://www.gulfresourcesinc.com |
|
Director of Investor
Relations |
|
Helen Xu (Haiyan Xu) |
beishengrong@vip.163.com
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