Gulf Resources Inc (GURE) 2023 Q1 法說會逐字稿

Good morning, everyone, and welcome to Gulf Resources First Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note, this conference is being recorded.

大家早上好，歡迎參加海灣資源 2023 年第一季度收益電話會議。 （操作員說明）請注意，本次會議正在錄製中。

I will now turn the conference over to your host, Helen Xu, Director of Investor Relations. Helen, over to you.

現在我將會議交給東道主投資者關係總監徐海倫 (Helen Xu)。海倫，交給你了。

Thank you, Jenny. Good morning, ladies and gentlemen, and good evening to all those of you who joining us from China. And we'd like to welcome all of you to Gulf Resources First Quarter 2023 Conference Call.

謝謝你，珍妮。女士們先生們早上好，所有從中國來參加我們會議的人晚上好。我們歡迎大家參加海灣資源 2023 年第一季度電話會議。

I'm 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 be contain forward-looking state information about Gulf Resources Incorporation and its subsidiaries business and 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也將參加今天的電話會議。我想提醒我們所有的聽眾，在這次電話會議中，電話會議期間的某些管理層聲明將包含有關海灣資源公司及其子公司業務和產品的前瞻性國家信息，其含義符合《證券法》第 175 條的規定。 1933 年法案和 1934 年證券交易法第 3b-6 條，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 the other oilfields and the power production chemicals; 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、向最終客戶的出貨量、新產品和現有產品的市場接受度；來自溴和其他油田以及電力生產化學品的現有競爭和新競爭的額外競爭；改變技術；使未來溴資產的能力以及其他各種因素超出其控制範圍。

All forward-looking statements are expressly qualified in their entirety by this cautionary statement and the risk factors detailed with 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.

所有前瞻性陳述均完全符合本警示性聲明以及公司向 SEC 提交的報告中詳細說明的風險因素。海灣資源公司不承擔修改或更新任何前瞻性陳述以反映本次電話會議之後發生的事件或情況的義務。

Accordingly, our company believes expectations reflecting in those forward-looking statements are reasonable, and there can be no assurance of such will prove to be correct.

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，並且不能保證這些預期將被證明是正確的。

In addition, any reference to the company's future performance represents the management's estimates as of today, the 16th of May 2023. For those of you unable to listen to the entire call at this time, a replay will be available 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 earlier for the details.

此外，任何對公司未來業績的提及均代表管理層截至今天（2023 年 5 月 16 日）的估計。對於那些目前無法收聽整個電話會議的人，可以在公司網站上觀看重播。也可以通過網絡廣播訪問該電話會議，並且可以通過我們的網站訪問該鏈接。因此，請查找我們之前發布的新聞稿以了解詳細信息。

So first of all, we will review the results for this quarter. And then I'd like to turn the call over to Mr. Liu for his comments. So it would be easy for shareholders to look at our results and think this was a best quarter. But we believe this quarter actually shows the strength of our business model and the significant opportunities for our company.

首先，我們將回顧本季度的業績。然後我想把電話轉給劉先生徵求意見。因此，股東很容易看到我們的業績並認為這是最好的季度。但我們相信本季度實際上展示了我們業務模式的優勢以及我們公司的重大機遇。

In this quarter, our chemical factory and Natural Gas facilities were still closed because of the winter shutdown. We lost 1 month of production. Bromine prices plunged by the highest percentage (inaudible). Crude salt prices were also down sharply since it could not get much worse. Yet despite these problems, we only lost $558,000. If we exclude the cost of our closed factories and costs during the plant shutdown of $2.4 million. We would have actually earned a profit.

本季度，由於冬季停工，我們的化工廠和天然氣設施仍然關閉。我們損失了 1 個月的生產。溴價格跌幅最高（聽不清）。原鹽價格也大幅下跌，因為情況已經不能再惡化了。然而，儘管存在這些問題，我們只損失了 558,000 美元。如果我們排除關閉工廠的成本和工廠停工期間的成本，則為 240 萬美元。我們實際上會賺取利潤。

We generated almost $5 million in cash and ended up with a cash position of almost $116 million or [$11.10] per share. When bromine prices go back up, which we expect they will, when our new chemical factory opens and when we begin to produce natural gas and brine in Sichuan which we believe will happen. We believe investors will be very pleased with the type of returns. We generate with our plans to develop export businesses in chemicals. We will have the financial flexibility to take actions to increase our shareholder value. So we look for this exciting future.

我們產生了近 500 萬美元的現金，最終現金頭寸接近 1.16 億美元，即每股 [11.10 美元]。當溴價格回升時（我們預計會回升），當我們的新化工廠開業，當我們開始在四川生產天然氣和鹽水時，我們相信這將會發生。我們相信投資者會對這種回報類型感到非常滿意。我們制定了發展化學品出口業務的計劃。我們將擁有財務靈活性來採取行動增加股東價值。所以我們期待這個令人興奮的未來。

So the revenues for this quarter, which is almost approximately $9.3 million, representing an increase of 4% over the same period of year 2022. The net loss was approximately $557,000 as compared to a net loss of $119,900 for the same period of last year.

因此本季度的收入幾乎約為 930 萬美元，較 2022 年同期增長 4%。淨虧損約為 557,000 美元，而去年同期淨虧損為 119,900 美元。

Earnings per share were a loss of $0.05 versus a loss of $0.01 for same period last year. Cash flow was approximately $4.8 million. Ending cash was $115.8 million. Cash per share was $11.10. Net-net cash was $9.09 per share, and shareholders' equity were $26.35 per share.

每股收益虧損 0.05 美元，去年同期虧損 0.01 美元。現金流量約為 480 萬美元。期末現金為 1.158 億美元。每股現金為 11.10 美元。淨現金為每股 9.09 美元，股東權益為每股 26.35 美元。

So now let's look at our business by segment. So first of all, let's look at our bromine and crude salt segment. For the 3-month period ended by March 31, 2023, the net revenue for the bromine segment was approximately $8.5 million compared to $8.1 million for the same period in the same previous year. This increase was due to 101% increase in tonnes sold and a 48 percentage decrease in average selling price. The gross profit margin of 27% compared to 52% for the same period last year. The decrease in the gross profit margin was primarily attributable to the lower average selling price of bromine.

現在讓我們按細分市場來看看我們的業務。首先，讓我們看看我們的溴和原鹽部分。截至 2023 年 3 月 31 日的三個月期間，溴部門的淨收入約為 850 萬美元，而去年同期為 810 萬美元。這一增長是由於銷量增加了 101%，而平均售價下降了 48%。毛利率為27%，而去年同期為52%。毛利率下降主要由於溴的平均售價較低。

As compared for the same period last year. Cost of net revenue were approximately $6.1 million compared to $3.9 million. The loss from operation was $409,700 compared to a profit of approximately $1.3 million for the same period last year.

與去年同期相比。淨收入成本約為 610 萬美元，而上年同期為 390 萬美元。運營虧損為 409,700 美元，而去年同期利潤約為 130 萬美元。

The net revenue for the crude salt was $748,700 and $754,000 for the same period of 2023 and 2022, respectively. This increase in the net revenue for the crude salt was due to a 32 percentage increase in tonnes sold and a 25 percentage decrease in the average selling price.

2023 年和 2022 年同期原鹽的淨收入分別為 748,700 美元和 754,000 美元。原鹽淨收入的增長是由於銷售噸數增加了 32%，平均售價下降了 25%。

The cost of net revenue was approximately $620,000 compared to $629,600 for the same period last year. Approximately crude salt earned a profit of $42,930 compared to loss of $521,921 for the same period in the previous year.

淨收入成本約為 620,000 美元，而去年同期為 629,600 美元。原鹽大約盈利 42,930 美元，而上年同期虧損 521,921 美元。

In May 2022, we separated bromine and crude salt business to confirm with the government regulation. This separation required different allocation of costs. The net impact was to increase the cost allocation to bromine and between the crude salt.

2022年5月，我們將溴和原鹽業務分開，以符合政府規定。這種分離需要不同的成本分配。淨影響是增加了溴和原鹽之間的成本分配。

So now let's look at the chemical segment. There was no revenue in Chemicals, loss from operations from our Chemical Products segment worth approximately $417,900 for the 3-month period ended March 31, 2023, compared to a loss from operations of approximately $513,000 in the same period.

現在讓我們看看化學領域。截至 2023 年 3 月 31 日的三個月期間，化學品部門沒有收入，化學產品部門的運營損失約為 417,900 美元，而同期運營損失約為 513,000 美元。

Natural Gas. Our Natural Gas segment had no revenue from production because we did lease some of equipment. So as a result, income from operations from our Natural Gas segment worth approximately $12,700 for the same period for the first quarter of 2023, compared to a loss of approximately $26,700 in the same period of year 2022.

天然氣。我們的天然氣部門沒有生產收入，因為我們租賃了一些設備。因此，2023 年第一季度同期天然氣部門的運營收入約為 12,700 美元，而 2022 年同期則虧損約 26,700 美元。

So now let's look at our business and strategic plan outlook for this year. First, we look at the bromine and crude salt. The price of bromine has dropped substantially this quarter. We believe there are 3 major reasons. Firstly, because the economy closed. There was a [sharp] downturn in domestic demand and a sharp drop off in export sales and downstream products as well.

現在讓我們來看看我們今年的業務和戰略計劃展望。首先，我們來看看溴和粗鹽。本季度溴價大幅下跌。我們認為有3個主要原因。首先，因為經濟關閉。國內需求急劇下滑，出口銷售和下游產品也急劇下降。

So in addition, because more people were home and not working during COVID-19 pandemic, it was less need for disinfectants. We believe that companies manufacturing disinfectants did not expect the economy to close and thus had too much inventory. We believe prices of bromine has bottomed and may rise from current levels. The supply and demand equation is still very advantageous.

此外，由於在 COVID-19 大流行期間更多的人待在家里而不工作，因此對消毒劑的需求也減少了。我們認為，生產消毒劑的公司沒有預料到經濟會關閉，因此庫存過多。我們認為溴的價格已經觸底，並可能從目前的水平上漲。供需方程仍然非常有利。

Some factories have been permanently closed. The economy is improving and exports are starting to return to normal.

一些工廠已永久關閉。經濟正在改善，出口開始恢復正常。

At this time, we are not in a position to project the timing or extent of the rebound in prices. However, the company believes that lack of bromine mine will offer us with stronger opportunities. The company remains optimistic about the ability to try to open one of its 2 closed factories in year 2023. The company is currently working with the local government on the related issues.

目前，我們無法預測價格反彈的時間或程度。不過，該公司相信，溴礦的缺乏將為我們提供更強的機會。該公司對在 2023 年嘗試開設兩家已關閉工廠之一的能力保持樂觀。該公司目前正在與當地政府就相關問題進行合作。

For the existing operating factories, the company has completed substantial of its capital expenditures. Capital expenditures for bromine and crude salt in 2023 will be limited to basic maintenance.

對於現有運營工廠，公司已完成大部分資本支出。 2023年溴和原鹽的資本支出將僅限於基本維護。

So for Chemicals segment, the company is still waiting for the customized machinery majorly includes that related to environmental issues, such as the waste gas treatment equipment, solid waste treatment equipment, and wastewater treatment equipment.

因此，對於化工板塊，公司仍在等待定制機械，主要包括與環境問題相關的機械，如廢氣處理設備、固廢處理設備、廢水處理設備。

The remaining equipment will be delivered as soon as the environmental equipment is available. This equipment is expected to be delivered by the 2nd quarter or 3rd quarter of 2023. Our recent equipment is -- once this equipment is delivered, the company will inform shareholders and post photos on its website. The company believes that once all of the equipment is delivered, it will take 3 to 4 months to get them installed. And then take another 2 to 3 months for testing. And the -- which will be in a position to apply for the environmental and safety approval. After the approval, it will take 4 months to conduct trial production, and then, we may start commercial production.

其餘設備將在環保設備到位後立即交付。該設備預計將於 2023 年第二季度或第三季度交付。我們最近的設備是——一旦該設備交付，公司將通知股東並在其網站上發布照片。該公司認為，一旦所有設備交付，安裝需要3至4個月的時間。然後再花2到3個月的時間進行測試。並且 - 將能夠申請環境和安全批准。獲批後，需要4個月時間進行試生產，然後才能開始商業化生產。

So for all this Chemical Export project, Mr. Naihui Miao, our COO and Director has been named as the Chairman of our task force to explore export opportunities for chemicals. Management team began to research which products and the markets offer the best opportunities to export.

因此，對於所有這個化學品出口項目，我們的首席運營官兼董事苗乃輝先生被任命為我們探索化學品出口機會的工作組主席。管理團隊開始研究哪些產品和市場提供最佳的出口機會。

The company will try to find this export opportunities, so we can gain the possible and greater financial flexibility to enhance shareholder value. Before selecting the specific products and the markets, we will also have to consider which of the products can be produced in the high quality by all this new chemical factory.

公司將盡力尋找這種出口機會，這樣就可以獲得可能的、更大的財務靈活性，從而提升股東價值。在選擇具體的產品和市場之前，我們還必須考慮所有這些新的化工廠可以高質量地生產哪些產品。

So for Sichuan Province project, as we have disclosed the company plans to proceed with its applications for the natural gas and brine project approvals with related government department until after government planning has been finalized, land and resource planning for the Sichuan Province. Because of this complexity, we are discussing the possibility of a joint venture with the government of Daying County for the extraction of bromine water and related products.

對於四川省項目，正如我們所披露的，該公司計劃向相關政府部門申請天然氣和鹽水項目審批，直至政府規劃、四川省土地和資源規劃最終確定。由於這種複雜性，我們正在討論與大英縣政府建立合資企業來提取溴水和相關產品的可能性。

We believe such a joint venture could help us to overcome some of the government-related issues. We will keep investors informed of our progress.

我們相信這樣的合資企業可以幫助我們克服一些與政府相關的問題。我們將隨時向投資者通報我們的進展。

So now let me turn the call back to Mr. Liu for his comments on this quarter.

現在讓我把電話轉回給劉先生，請他對本季度發表評論。

(foreign language)

（外語）

(foreign language)

（外語）

[Interpreted] So hi, everyone. So just note this was the comments from the company's CEO, Xiaobin Liu. So I will do a translation for his comments.

【翻譯】大家好。請注意，這是該公司首席執行官劉曉斌的評論。所以我會對他的評論進行翻譯。

First of all, welcome all of you to attend the first quarter 2023 earnings conference call. The sharp decline in the price of bromine significantly impacted our earnings this quarter. We expect these prices have hit bottom and may rise from here. Nonetheless, despite the decline, we generated free cash flow and increased our cash position.

首先，歡迎大家參加2023年第一季度財報電話會議。溴價格的大幅下跌嚴重影響了我們本季度的盈利。我們預計這些價格已經觸底，並可能從這裡上漲。儘管如此，儘管有所下降，我們還是產生了自由現金流並增加了現金頭寸。

As for the close of business on May 12, 2023, our cash was almost 4x of our market capitalization and our book value per share was almost 9x our market capitalization. We believe bromine price will rebound, and we will try to open one more facility this year. We are very optimistic about the opportunities for our chemical business.

截至 2023 年 5 月 12 日收盤，我們的現金幾乎是市值的 4 倍，每股賬面價值幾乎是市值的 9 倍。我們相信溴價將會反彈，今年我們將嘗試再開設一座工廠。我們對化工業務的機遇非常樂觀。

In year 2015 and year 2016, our chemical business had income from operations of $33 million and $25.5 million, respectively. We believe our new chemical facility will be profitable and we also believe that we will get permission to drill for natural gas and brine in Sichuan Province. While there is no certainty yet, but our discussions with the local government are going well.

2015年和2016年，我們的化學品業務的運營收入分別為3300萬美元和2550萬美元。我們相信我們的新化工設施將會盈利，我們也相信我們將獲得在四川省鑽探天然氣和鹽水的許可。雖然還沒有確定性，但我們與當地政府的討論進展順利。

So finally, the company has established our task force this year, led by Mr. Naihui Miao, the company's COO, that will the identify the opportunities for the export of chemical business, so we can may gain the possible financial flexibility to undertake critical action and to enhance our shareholder value.

所以最後，公司今年成立了我們的工作組，由公司首席運營官苗乃輝先生領導，該工作組將確定化學品出口業務的機會，以便我們可以獲得可能的財務靈活性來採取關鍵行動並提高我們的股東價值。

So now, operator, can we start our Q&A section for today.

那麼現在，接線員，我們可以開始今天的問答部分了嗎？

No problem, Helen. (Operator Instructions) We don't appear to have anyone in queue at the moment, Helen. I can let you know if someone comes in.

沒問題，海倫。 （操作員說明）目前我們似乎沒有人在排隊，海倫。如果有人進來我可以通知你。

Okay. Thank you, operator. (foreign language)

好的。謝謝你，接線員。 （外語）

Hi operator, do you mind just ask one more time. If there is no more questions, we can close the call for today.

您好，接線員，您介意再問一次嗎？如果沒有其他問題，我們就可以結束今天的通話。

No problem. (Operator Instructions) We don't appear to have anyone in queue, Helen.

沒問題。 （操作員說明）我們似乎沒有人在排隊，海倫。

Okay. I think that's all for today. Thank you very much, Jenny, and thank you all for attending the call today. You have a good night, and good day. Wish you all. Thank you. Bye-bye.

好的。我想這就是今天的全部內容。非常感謝，珍妮，也感謝大家參加今天的電話會議。你有一個美好的夜晚，美好的一天。祝大家。謝謝。再見。

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

非常感謝。今天的會議到此結束。此時您可以斷開電話線，度過美好的一天。感謝您的參與。

Thank you, Jenny. Bye-bye.

謝謝你，珍妮。再見。

Thanks, Helen. Take care. Bye.

謝謝，海倫。小心。再見。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]