Gulf Resources Inc (GURE) 2022 Q4 法說會逐字稿

Greetings. Welcome to the Gulf Resources Fiscal Year 2022 Earnings Conference Call. (Operator Instructions) Please note this conference is being recorded. I will now turn the conference over to your host, Helen Xu. Ma'am, you may begin.

問候。歡迎來到 Gulf Resources 2022 財年收益電話會議。 （操作員說明）請注意正在錄製此會議。我現在將會議轉交給主持人 Helen Xu。女士，您可以開始了。

Thank you, operator. Good morning, ladies and gentlemen, and good evening to all those of you for joining us from China. And we'd like to welcome all of you to Gulf Resources Fiscal Year 2022 Earnings Conference Call.

謝謝你，運營商。早上好，女士們，先生們，晚上好，所有從中國加入我們的人。我們歡迎大家參加 Gulf Resources 2022 財年收益電話會議。

I am Helen Xu, the IR Director. Our CEO of the company, Mr. Xiaobin Liu, will also join this call today. I'd like to remind you to all our listeners that in this call, certain management statements during the call will contain forward-looking information about Gulf Resources Incorporation and its subsidiaries business and the products within the meaning of the Rule 175 on the Securities Act of 1933 and the Rule 3b-6 under the Securities Exchange Act of 1934 and are subject to the Safe Harbor created by those rules.

我是 IR 總監 Helen Xu。我們公司的首席執行官劉曉斌先生今天也將參加此次電話會議。我想提醒我們所有的聽眾，在本次電話會議中，某些管理層聲明將包含有關 Gulf Resources Incorporation 及其子公司業務以及證券法第 175 條所指產品的前瞻性信息1933 年的《證券交易法》和 1934 年《證券交易法》第 3b-6 條規則，並受這些規則創建的安全港的約束。

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 business conditions in China. The risks associated with the COVID-19 pandemic outbreak; future product development and production capabilities; shipments to end customers; market acceptance of new and existing products; additional competition from existing and new competition from the bromine and with the other chemical productions; changing technology; the ability to make future bromine assets; and the various other factors beyond its control.

考慮到許多風險因素，包括但不限於中國的總體經濟和商業狀況，實際結果可能與今天討論的結果有所不同。與 COVID-19 大流行爆發相關的風險；未來的產品開發和生產能力；向最終客戶發貨；新產品和現有產品的市場接受度；來自溴和其他化學產品的現有和新競爭的額外競爭；不斷變化的技術；製造未來溴資產的能力；以及其無法控制的各種其他因素。

All forward-looking statements are expressly qualified in this entirety by this cautionary statement and the risk factors detailed with the company's reports filed with the SEC. Company, 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 expectations reflecting in those forward-looking statements are reasonable, and there can be no assurance of such prove to be correct.

所有前瞻性陳述均由本警告聲明和公司向美國證券交易委員會提交的報告中詳述的風險因素明確限定。公司 Gulf Resources 不承擔修改或更新任何前瞻性陳述以反映本次電話會議日期後發生的事件或情況的義務。因此，我們公司認為這些前瞻性陳述中反映的預期是合理的，並且不能保證此類陳述是正確的。

In addition, any reference to the company's future performance represents the management's estimates as of today, the 3rd of April 2023. For those of you unable to listen to the entire call at this time, a replay will be available, and the link is accessible through our website. So please locate to our press release issued earlier for the details.

此外，對公司未來業績的任何參考均代表管理層截至今天，即 2023 年 4 月 3 日的估計。對於此時無法收聽整個電話會議的人，可以重播，並且可以訪問鏈接通過我們的網站。因此，請查看我們之前發布的新聞稿了解詳情。

So before I turn to the remarks from Mr. Liu and the questions from our investors, let me briefly review the results for fiscal year 2022. The company had an excellent fiscal year 2022. Revenues increased approximately 20% to approximately $66.1 million. Gross profits increased 34% to approximately $37.4 million. Profit from operations increased 216 percentage to approximately $16.5 million. We also had approximately $16 million of direct labor and factory overhead incurred during the shutdowns of our business.

因此，在我轉向劉先生的評論和我們投資者的問題之前，讓我簡要回顧一下 2022 財年的業績。該公司在 2022 財年表現出色。收入增長了約 20%，達到約 6610 萬美元。毛利增長 34% 至約 3740 萬美元。運營利潤增長了 216%，達到約 1650 萬美元。在我們的業務關閉期間，我們還產生了大約 1600 萬美元的直接人工和工廠間接費用。

Income before taxes increased 210% to $16.6 million from $5.4 million. After tax income was approximately $10.06 million compared to a loss of approximately $924.5 (sic - see press release, "$924,718"). Earnings per share was $1 versus a loss of $0.09 per share.

稅前收入從 540 萬美元增長 210% 至 1660 萬美元。稅後收入約為 1006 萬美元，而虧損約為 924.5 美元（原文——見新聞稿，“924,718 美元”）。每股收益為 1 美元，而每股虧損為 0.09 美元。

We generated cash flow from operations of approximately $51.1 million compared to approximately $23.3 million in the previous year. We invested approximately $37.6 million, making us free cash flow positive, despite negative foreign currency translation adjustment of approximately $24.9 million from the decline of the RMB against the U.S. dollar and in cash was $108.2 million or $10.37 per share, net-net cash, which is cash minus all liabilities per share was $8.38.

我們從運營中產生的現金流量約為 5110 萬美元，而上一年約為 2330 萬美元。我們投資了約 3760 萬美元，使我們的自由現金流為正，儘管因人民幣兌美元貶值而進行了約 2490 萬美元的負外幣換算調整，現金為 1.082 億美元或每股 10.37 美元，淨現金，這每股現金減去所有負債為 8.38 美元。

Book value per share was $26.04. We are very pleased to have had such strong earnings and we have generated good free cash flow year over year 2022. Instead of reading through all the numbers, which are in our press release, we'd like to bring investors up to date on a series of current and projected issues.

每股賬面價值為 26.04 美元。我們很高興獲得如此強勁的收益，並且我們在 2022 年產生了良好的自由現金流。我們不想通讀新聞稿中的所有數字，而是希望讓投資者了解最新情況一系列當前和預計的問題。

Firstly, let's look at our Bromine & Crude Salt segment. Last year, our Bromine business was extremely profitable with Bromine prices increasing 14%. Since the end of the fiscal year, Bromine prices have dropped approximately 40%. The company believes there are numerous reasons for the decline in Bromine prices.

首先，讓我們看看我們的溴和粗鹽部分。去年，我們的溴業務利潤豐厚，溴價格上漲了 14%。自本財年末以來，溴價已下跌約 40%。該公司認為，溴價下跌的原因有很多。

Firstly, the economic conditions in China as well as the rest of the world have slowed. Secondly, many of our customers have had their factories closed for Chinese New Year as well as for COVID restrictions. Third, demand for fire retardants for export decreased due to the lockdown. Fourth, the export for some other bromine downstream products have also decreased.

首先，中國和世界其他地區的經濟狀況已經放緩。其次，我們的許多客戶的工廠因農曆新年和 COVID 限製而關閉。三是受疫情影響，出口阻燃劑需求減少。四是其他一些溴下游產品出口量也有所下降。

Fifth, with the lockdown in China, many fewer people used disinfectants because they were home instead of going out or school -- for work or school. Producers of disinfectants and retailers had geared up for continued high demand, and the lockdown was a surprise, leaving many with too much inventory. We believe this situation will reverse. The company remains optimistic about the opportunities in this bromine business.

第五，隨著中國的封鎖，使用消毒劑的人越來越少，因為他們在家而不是外出或上學——工作或上學。消毒劑生產商和零售商已經為持續的高需求做好了準備，而封鎖出人意料，導致許多庫存過多。我們相信這種情況將會逆轉。該公司對溴業務的機遇保持樂觀。

Some factories in China have been permanently closed, and some others, like our factories #2 and #10, which have not yet received permission to open yet. There have been no major and a few minor new discoveries of bromine. The decline of the RMB against the U.S. dollar has made imports more expensive. With the Chinese economy and its factories starting to reopen, demand should increase.

中國的一些工廠已經永久關閉，還有一些工廠，比如我們的#2 和#10 工廠，還沒有獲得開工許可。溴沒有重大新發現，也有少量新發現。人民幣對美元的貶值使得進口商品更加昂貴。隨著中國經濟及其工廠開始重新開工，需求應該會增加。

Our factory #8 entered production at the end of the year. We expect a full level of production flow from this factory in year 2023. We also expect and will try its best to be able to open one of our closed factories, #2 and #10, in year 2023. We are working with the government to resolve these problems as quickly as possible.

我們的#8 工廠於年底投產。我們預計該工廠將在 2023 年實現全面生產流程。我們還預計並將盡最大努力在 2023 年開設我們關閉的工廠之一，#2 和 #10。我們正在與政府合作盡快解決這些問題。

As far as the price is concerned, we believe bromine prices have reached a bottom and will begin to recover. However, until we get a better handle on the future pricing of bromine, we are not to be able to make any revenue and earnings projections for fiscal year 2023. We are however very confident about the long-term profitability potential for Bromine & Crude Salt Segment. Any shareholders wishing to track the daily price of bromine may look at the website, sunsirs.com, which checks daily bromine prices in China.

就價格而言，我們認為溴價已經觸底，將開始回升。然而，在我們更好地處理溴的未來定價之前，我們無法對 2023 財年的收入和盈利做出任何預測。但是，我們對溴和粗鹽的長期盈利潛力充滿信心部分。任何希望追踪溴的每日價格的股東都可以查看網站 sunsirs.com，該網站可查看中國的每日溴價格。

So now let's look at our Yuxin Chemical Factory segment. On March 23, year 2023, the company issued a press release detailing the delays in the opening of our Yuxin chemical factory as noted in our press release. We have constructed a bulk of the factory and received a good portion of equipment. The refrigeration and air compressor units have recently been received. The remaining equipment primarily includes that related to environmental issues such as the waste gas treatment equipment, solid waste treatment equipment and waste water treatment equipment.

那麼現在讓我們看看我們的裕新化工廠部分。 2023 年 3 月 23 日，公司發布了一份新聞稿，詳細說明了我們在新聞稿中提到的裕新化工廠開業延遲的情況。我們建造了大部分工廠並收到了大部分設備。製冷和空壓機組近期已收到。其餘設備主要包括廢氣處理設備、固廢處理設備、廢水處理設備等環保相關設備。

The delivery of this equipment was initially delayed by the COVID pandemic. The recent delay has been caused by the increase of stricter government requirements for environmental issues related to the public safety, including those that impact the air and the water pollution. We want investors to understand that these are not simple of the share of products. To meet especially government regulations, each piece of the equipment has to be customized to specific cases in the environment.

該設備的交付最初因 COVID 大流行而延遲。最近的延遲是由於政府對與公共安全相關的環境問題（包括那些影響空氣和水污染的問題）提出了更嚴格的要求。我們希望投資者明白，這些並不是簡單的產品份額。為了滿足特別是政府法規，每件設備都必鬚根據環境中的特定情況進行定制。

Gulf Resources have been working closely with the suppliers on the specifications that will meet the stricter government regulations. We believe we are making excellent progress in completing this phase. Once the equipment is delivered, it will take approximately 3 to 4 months to get them fully installed. After installation, the testing process should take another 2 to 3 months. After testing is complete, we will apply for environmental and safety approval from the government.

海灣資源一直在與供應商密切合作，制定符合更嚴格的政府法規的規格。我們相信我們在完成這一階段方面取得了很好的進展。設備交付後，大約需要 3 到 4 個月才能完成安裝。安裝後，測試過程還需要 2 到 3 個月。測試完成後，我們將向政府申請環境和安全批准。

After receiving these approvals, trial production may take an additional 4 months. Once trial production is completed, we will be able to start commercial production. So we are asserting that to our customers, our investors that as frustrated as we are by the delay in the opening of our chemical plant, we could not have projected COVID pandemic, the response of the government or the closing of the economy.

在獲得這些批准後，試生產可能還需要 4 個月的時間。一旦試生產完成，我們將能夠開始商業生產。因此，我們向我們的客戶、我們的投資者斷言，儘管我們對化工廠的延遲開放感到沮喪，但我們無法預測 COVID 大流行、政府的反應或經濟的關閉。

We are working as fast as we can to overcome these obstacles. We will continue to actively update our investors on our progress.

我們正在盡快克服這些障礙。我們將繼續積極向投資者通報我們的進展。

[Mr. Liu], we are optimistic about the potential profitability of our Yuxin Chemical Factory. Our original view was that Yuxin factory would have been producing higher-margin products. In year 2016, before the original chemical factory was shut down, our chemical factory had segment earnings of $25.5 million. We are currently not making long-term estimates for a factory that is still under construction.

[先生。 Liu]，我們看好裕新化工廠的潛在盈利能力。我們最初的看法是，裕新工廠生產的產品利潤率更高。 2016 年，在原化工廠關閉之前，我們化工廠的分部收益為 2550 萬美元。我們目前不對仍在建設中的工廠進行長期估算。

We would also like to note that chemical margins usually vary inversely with bromine margins, since bromine is a basic raw material for the chemical products. However, the competitive environment in China should be quite favorable as with bromine manufacturing have been closed and will not reopen as the Chinese economy recovers and our Yuxin Chem factory is open. We believe investors will be pleased with the level of profit it will generate.

我們還想指出，化學品利潤率通常與溴利潤率成反比，因為溴是化工產品的基本原料。然而，中國的競爭環境應該是相當有利的，因為溴生產已經關閉，並且不會隨著中國經濟的複蘇和我們的裕新化學工廠的開放而重新開放。我們相信投資者會對它產生的利潤水平感到滿意。

So now let's look at the Sichuan Natural Gas and Bromine segment business. We are still waiting for the government of Sichuan Province to finalize its land and resource planning, and that then the company plans to proceed with its application for the natural gas and brine project approvals with related government departments.

那麼現在讓我們來看看四川天然氣和溴分部的業務。我們仍在等待四川省政府完成其國土資源規劃，屆時公司計劃向相關政府部門申請天然氣和鹵水項目的批复。

The company remains optimistic about the future of this project because, firstly, the government has ruled that private companies can drill for and produce natural gas; secondly, the government had indicated that it wants to improve the private sector and strengthen the private company. However, the company has decided to explore other options to hasten the process.

該公司對該項目的未來持樂觀態度，因為，首先，政府已規定私人公司可以鑽探和生產天然氣；其次，政府表示要改善私營部門，加強私營公司。然而，該公司已決定探索其他選項來加快這一進程。

One very promising option is to form a partnership with the government of Daying County for the extraction of halogen water and the related products. Under such a partnership, the government of Daying County could assist the company to obtain the related approvals or may also be able to help provide other infrastructure helps, but the company would then produce products and the partners will share the process. While we cannot guarantee that such a partnership will be finalized, it is encouraged.

一個非常有前途的選擇是與大英縣政府建立合作夥伴關係，以提取鹵水和相關產品。在這種合作關係下，大英縣政府可以協助公司獲得相關批准，也可以幫助提供其他基礎設施幫助，但公司將生產產品，合作夥伴將共享過程。雖然我們不能保證這種夥伴關係一定會最終確定，但我們鼓勵這樣做。

We believe this could be very effective way for gaining approval to reopen our natural gas project and gain approval for drilling both natural gas and brine products. We will keep investors updated on the progress of our negotiations with the government of Daying County.

我們相信，這可能是獲得批准重新開放我們的天然氣項目以及獲得鑽探天然氣和鹽水產品批准的非常有效的方式。我們將讓投資者了解我們與大英縣政府談判的最新進展。

Now let's look at our shareholder value part. Based on the closing of trading last Friday, our stock is selling an extremely cheap valuation. Our selling PE was 2.68x. Our price divided by cash was only 25.8 percentage. We were selling at less than 1/3 of our net-net cash. We were selling at only 10% of our book value. Shareholders keep writing to us asking what we can do about the share price. Many shareholders have asked us to pay a dividend or buy back large amount of shares.

現在讓我們看看我們的股東價值部分。根據上週五的收盤價，我們的股票以極低的估值出售。我們的銷售市盈率為 2.68 倍。我們的價格除以現金僅為 25.8%。我們以不到淨現金的 1/3 的價格出售。我們的售價僅為賬面價值的 10%。股東不斷寫信給我們，詢問我們能為股價做些什麼。許多股東要求我們支付股息或回購大量股份。

However, as we have repeated on the call after call, China has strong currency restrictions. We are hammered in getting money out of the country. I'd like to repeat this so all our investors fully understand China has strong currency restrictions. We are hammered in getting money out of the country.

然而，正如我們在電話中反復強調的那樣，中國有嚴格的貨幣限制。我們為把錢轉移到國外而苦惱。我想重複一遍，讓我們所有的投資者充分了解中國有嚴格的貨幣限制。我們為把錢轉移到國外而苦惱。

Shareholders have also suggested we hire an IR firm, investor relations firm. As of the close on Friday, we had a market capitalization of about $29 million. Our stock trades [under] the average of 11,319 shares a day or about $30,000. This makes us too small for most institutional investors.

股東們還建議我們聘請一家 IR 公司、投資者關係公司。截至週五收盤，我們的市值約為 2900 萬美元。我們的股票平均每天交易 [低於] 11,319 股或約 30,000 美元。這讓我們對大多數機構投資者來說太小了。

We believe that once we have more bromine factories in operation, our chemical factories is open, and we start to producing natural gas and brine products in Sichuan, our shares will appreciate and we may be attractive to institutional investors. However, we have developed an automatic strategy that we believe it may be able to help the company to afford us the financial flexibility to consider the type of action our shareholders had been requesting.

我們相信，一旦我們有更多的溴工廠投入運營，我們的化工廠開工，我們開始在四川生產天然氣和鹽水產品，我們的股票將會升值，我們可能對機構投資者俱有吸引力。然而，我們已經制定了一種自動策略，我們相信它可以幫助公司為我們提供財務靈活性，以考慮我們的股東所要求的行動類型。

At this time, I will turn the call over to Mr. Liu to describe this strategy.

這時候，我就把電話轉給劉老師來描述這個策略。

(spoken in Chinese)

（用中文講）

(spoken in Chinese) Hi, everyone. So I will do the translation for Mr. Liu's explanation on this strategy.

（用中文說）大家好。所以劉老師對這個攻略的解釋我來翻譯一下。

I'm the CEO of the company, Mr. Xiaobin Liu. First of all, welcome all of you to attend the fiscal year 2022 earnings conference call. We know that shareholders are frustrated, so is management team. In the last 3 years, I have earned no cash salary. Our COO and CFO have earned about $18,000 a year only. I personally repaid the company back about $600,000 of the salary I earned for more than 11 years.

我是公司的總裁，劉曉斌先生。首先，歡迎大家參加2022財年財報電話會議。我們知道股東感到沮喪，管理團隊也是如此。在過去的 3 年裡，我沒有賺到現金工資。我們的首席運營官和首席財務官每年的收入僅為 18,000 美元左右。我個人向公司償還了我 11 年多的工資中的約 600,000 美元。

I don't think that we may find another company where management will pay back their salary for more than 1 decade. The welfare of my family and that of other senior management completely depends on the price of the shares. I can assure you not one is more frustrated than management team. We are not just sitting around. We are now actively planning on a strategy that may give us the financial flexibility to help our shareholders, while bromine is difficult to transport and export.

我不認為我們可能會找到另一家公司，管理層會在超過 10 年的時間裡償還他們的工資。我家人和其他高級管理人員的福利完全取決於股票的價格。我可以向你保證，沒有人比管理團隊更沮喪。我們不只是無所事事。我們現在正在積極規劃一項戰略，該戰略可能會給我們帶來財務靈活性以幫助我們的股東，而溴卻很難運輸和出口。

The same is not the case for chemicals. Many of the products we are planning to produce in our chemical factory, such as the materials for pharmaceuticals intermediaries are actively exports from China to countries in Asia and around the world. We have formed a task force to analyze the potential of each of these products and the markets, identify potential customer fees and focus on the products these customers are interested in purchasing.

化學品的情況並非如此。我們計劃在我們的化工廠生產的許多產品，例如醫藥中間體的材料，正積極地從中國出口到亞洲和世界各地的國家。我們已經成立了一個工作組來分析這些產品和市場的潛力，確定潛在的客戶費用並專注於這些客戶有興趣購買的產品。

When our chemical factory is ready for full production, we may also be ready to begin exporting some of our chemical products. We expect that the export of these products may give us a financial flexibility that our shareholders and our management team has been demanding. We believe this strategy of this task force will provide a good opportunity for our company.

當我們的化工廠準備好全面生產時，我們也可能準備開始出口我們的一些化學產品。我們預計，這些產品的出口可能會給我們帶來股東和管理團隊一直要求的財務靈活性。我們相信這個工作組的這一戰略將為我們公司提供一個很好的機會。

So now let's turn back the call for Helen, and we may start the Q&A section.

現在讓我們轉回海倫的電話，然後我們可以開始問答部分。

Hi, operator. Yes. I open the call for the Q&A session.

你好，運營商。是的。我打開問答環節的電話。

(Operator Instructions)

（操作員說明）

Your first question for today is coming from [John Ralph], a private investor.

您今天的第一個問題來自私人投資者 [John Ralph]。

Yes, I would like to ask, are there people outside the company involved in the task force looking at exporting chemical products? And who are they?

是的，我想問一下，是否有公司外部人員參與了出口化工產品的工作組？他們是誰？

John, sorry, I did not get your question. You mean task force?

約翰，抱歉，我沒聽清你的問題。你是說專案組？

Yes. You said you're going to establish a task force to look at the possibility of exporting chemical products. I want to know if there are people outside the company's employee list who are involved in that task force.

是的。你說你要成立一個工作組來研究出口化工產品的可能性。我想知道是否有公司員工名單之外的人參與了該工作組。

(interpreted)

（翻譯）

(spoken in Chinese)

（用中文講）

John, currently, it is from the company inside staff. We are doing the planning still and do the analyze. And once we're going well with this, future on, we may consider to hire someone from outside consultant for the marketing and the technical segment.

約翰，目前是公司內部人員。我們仍在進行規劃並進行分析。一旦我們在這方面進展順利，未來，我們可能會考慮從外部顧問中聘請某人負責營銷和技術部門。

Okay. I would encourage you also to talk to an investment banker to look at opportunities for improving the company's stock price.

好的。我還鼓勵您與投資銀行家交談，尋找提高公司股價的機會。

Okay, thank you. (spoken in Chinese)

好的謝謝。 （用中文講）

(spoken in Chinese)

（用中文講）

(Operator Instructions) There are no further questions in queue. I will now turn the call over to management for closing remarks.

（操作員說明）隊列中沒有其他問題。我現在將把電話轉給管理層作結束語。

(spoken in Chinese) Liu? Call back?

（用中文說）劉？打回來？

Yes, it looks like Mr. Liu's line disconnected. One moment while I reconnect his line.

是的，劉先生的電話好像斷線了。一會兒我重新連接他的線。

Okay. It's okay, Holly. I think we can close the call for today if there is no more questions.

好的。沒關係，霍莉。如果沒有其他問題，我想我們可以結束今天的電話會議。

There are no further questions in queue. I will close the call now. Thank you. This concludes today's conference call.

隊列中沒有其他問題。我現在將結束通話。謝謝。今天的電話會議到此結束。

Thank you all for attending the call. Wish you have a good day. Thank you. Take care. Bye-bye.

感謝大家參加電話會議。祝你有一個美好的一天。謝謝。小心。再見。

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

謝謝。今天的會議到此結束，此時您可以斷開您的線路。感謝您的參與。

Okay. Thank you. Thank you, Holly. Bye-bye. Have a good day.

好的。謝謝。謝謝你，霍莉。再見。祝你有美好的一天。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

該筆錄中標記（解釋）的部分是由現場通話中的口譯員說出的。翻譯由贊助本次活動的公司提供。