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Strategies & Market Trends : Value Investing

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To: Jurgis Bekepuris who wrote (41250)	2/4/2011 2:55:45 AM
From: JHalperin	Read Replies (3) of 78531

GFRE is also one of my top holdings and along with other Chinese small-caps took a "CCME" hit today. I estimate a forward PE of 5 at todays close because bromine prices appear to have increased alot since their 3rd qtr report where they said prices averaged $2,700. Both the published bromine spot price and ALB's 4th qtr. report indicate current pricing of at least $4,000. I presume GFRE's realized prices don't exactly follow spot due to fixed priced contracts, but they did mention in November they are re-negotiating contract prices. Together with the latest salt field purchase that wasn't figured in their 11/10 guidance, the forward eps estimte by analysts of $1.67 is probably low and possibly very low. A wild card is their cost of production which increased in the third qtr on flat sales. Increased bromine prices plus increasing production less increased cost of sales equal at least $1.80 eps next year? If so, GFRE is selling at 5x forward earnings, has a sqeaky clean balance sheet (no AR or inventory issues), has a share repurchase program and Big 4 Deloitte is looking them over. I added more today at $9.15. What's your current thinking on GFRE? Thanks, Joel

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