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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (37860)	5/11/2010 11:21:53 AM
From: Madharry	Respond to of 78596

bare in mind that the dilution was recent and as they raised cash presumably to allow fidelity to pick up a pretty good stake in the company and to have funds to acquire more bromine producers, which hasnt happened yet. I think the share price is more a function of fear of china slowing down than anything else.

To: Spekulatius who wrote (37860)	6/9/2010 12:27:39 AM
From: Spekulatius	Read Replies (2) \| Respond to of 78596

re GFRE - this is how a bad acquisition looks like: finance.yahoo.com "The acquisition will result in additional annual production capacity of 3,000 tons of bromine and 100,000 tons of crude salt, expanding the consolidated annual production capacity of SCHC to 46,300 tons of bromine and 550,000 tons of crude salt. We expect the additional production of bromine and crude salt from these new assets to add approximately $1.0 million in incremental net income in fiscal 2010 based on current market prices and five months of effective production," stated Xiaobin Liu, Chief Executive Officer of Gulf Resources. Consideration for the asset purchase includes $13.2 million in cash and the issuance of shares of 70,650 shares of common stock at a price of $9.859 per share, bringing the total consideration to $13.9 million . 1M$ in 5 month makes 2.4M$ in Bromide revenues, their income from operations from the Bromide business was 45% of revenues=1.08M$x0.6 (40% TAX) =0.65M$ post tax earnings for a 13.9M$ investment. OK these are my own numbers but isn't it telling that management does not say anything about the earning impact of this acquisition. Feel free to correct me if am wrong, but unless I am wrong by a lot this is a very bad deal - leaving three bad options - either management translates "shareholder" as "bagholder" in Mandarin, is math challenged (very unlikely in China) or fraudulent.