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Gulf Resources Inc – Other Chemical and Fertilizer Mineral Mining
Gulf Resources, Inc. operates through three wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ('SCHC'), Shouguang Yuxin Chemical Industry Co., Limited ('SYCI'), and Daying County Haoyuan Chemical Company Limited ('DCHC'). 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. DCHC was established to further explore and develop natural gas and brine resources (including bromine and crude salt) in China. Forward-Looking Statements
Analysis Results
Intrinsic Value $8.58
Latest Price $2.97
Relative Value 65% undervalued
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Cash Flow (Millions)
Analysis Parameters
New Ticker
Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -18.2%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 3.3%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -18.2%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (million) Present value (million)
2023 6.3 6.09
2024 5.15 4.82
2025 4.21 3.82
2026 3.44 3.02
2027 2.81 2.39
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 84.4 million. This corresponds to a present value of 69.4 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 20.1 million. Adding in the terminal value gives a total present value of 89.5 million.

There are presently 10.4 million outstanding shares, so the intrinsic value per share is 8.58.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 119,425,371
Current Cash 108,226,214
Current Liabilities 11,775,765
Current Debt 213,346
Non-Cash Working Capital (NCWC) -363,262
Change in NCWC -6,368,754
EBIT 28,484,325
Tax Provision 6,586,985
Depreciation and Amortization 26,775,620
Capital Expenditure -37,560,932
Unlevered Free Cash Flow 59,027
Current Assets 115,434,862
Current Cash 95,767,263
Current Liabilities 13,889,536
Current Debt 227,429
Non-Cash Working Capital (NCWC) 6,005,492
Change in NCWC -197,705
EBIT 15,929,475
Tax Provision 6,298,218
Depreciation and Amortization 20,543,425
Capital Expenditure -30,093,140
Unlevered Free Cash Flow -116,163
Current Assets 107,310,965
Current Cash 94,222,538
Current Liabilities 7,102,300
Current Debt 217,070
Non-Cash Working Capital (NCWC) 6,203,197
Change in NCWC 5,410,233
EBIT -1,513,002
Tax Provision -1,108,471
Depreciation and Amortization 15,987,860
Capital Expenditure -21,719,369
Unlevered Free Cash Flow -1,834,278
Current Assets 107,202,708
Current Cash 100,301,986
Current Liabilities 6,306,264
Current Debt 198,506
Non-Cash Working Capital (NCWC) 792,964
Change in NCWC -5,125,276
EBIT -8,119,103
Tax Provision 2,806,987
Depreciation and Amortization 14,060,927
Capital Expenditure -60,611,949
Unlevered Free Cash Flow -59,795,401
Current Assets 187,343,536
Current Cash 178,998,935
Current Liabilities 2,623,841
Current Debt 197,480
Non-Cash Working Capital (NCWC) 5,918,240
Change in NCWC -23,658,421
EBIT -10,050,242
Tax Provision -13,087,855
Depreciation and Amortization 17,443,318
Capital Expenditure -35,954,282
Unlevered Free Cash Flow -52,219,627
Current Assets 241,513,446
Current Cash 208,906,759
Current Liabilities 3,233,232
Current Debt 203,206
Non-Cash Working Capital (NCWC) 29,576,661
Change in NCWC -14,548,737
EBIT 35,354,799
Tax Provision 3,610,140
Depreciation and Amortization 20,197,313
Capital Expenditure -28,419,975
Unlevered Free Cash Flow 1,545,540
Current Assets 221,767,490
Current Cash 163,884,574
Current Liabilities 13,945,196
Current Debt 187,678
Non-Cash Working Capital (NCWC) 44,125,398
Change in NCWC 2,790,294
EBIT 48,449,540
Tax Provision 11,810,207
Depreciation and Amortization 24,880,246
Capital Expenditure -17,669,796
Unlevered Free Cash Flow 46,538,412
Current Assets 190,821,155
Current Cash 133,606,392
Current Liabilities 16,076,437
Current Debt 196,778
Non-Cash Working Capital (NCWC) 41,335,104
Change in NCWC 1,670,029
EBIT 45,680,617
Tax Provision 11,371,908
Depreciation and Amortization 29,095,648
Capital Expenditure -23,541,754
Unlevered Free Cash Flow 41,472,400
Current Assets 194,127,792
Current Cash 146,585,601
Current Liabilities 8,082,244
Current Debt 205,128
Non-Cash Working Capital (NCWC) 39,665,075
Change in NCWC 524,381
EBIT 24,032,914
Tax Provision 6,226,015
Depreciation and Amortization 27,642,222
Capital Expenditure -7,202,717
Unlevered Free Cash Flow 38,787,551
Current Assets 158,072,937
Current Cash 107,828,800
Current Liabilities 11,305,835
Current Debt 202,392
Non-Cash Working Capital (NCWC) 39,140,694
Change in NCWC 7,945,500
EBIT 25,382,548
Tax Provision 7,607,683
Depreciation and Amortization 27,460,693
Capital Expenditure -3,830,757
Unlevered Free Cash Flow 50,200,255
Current Assets 107,258,813
Current Cash 65,241,035
Current Liabilities 11,015,748
Current Debt 193,164
Non-Cash Working Capital (NCWC) 31,195,194
Change in NCWC 16,243,153
EBIT 21,222,841
Tax Provision 5,591,453
Depreciation and Amortization 23,317,594
Capital Expenditure -37,877,099
Unlevered Free Cash Flow 17,142,328

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