We shall see, looks good to me. Been here awhile.
Ok, let's get back to reality. Mr. Liu, CEO of Gulf Resources, said
Following the rapid increase in the first half of the year, we have seen market prices of bromine begin to stabilize. However, we have successfully renegotiated contract prices with all of our major customers near current levels. We believe the new contract prices will allow us to benefit from the strong pricing environment and maintain our profitability.
Given this comment, bromine prices can't decline 21%, especially if the company already has contract prices.
If prices drop to $2,750 per metric ton in the 2nd half of 2010 with the same gross margin realized in Q2, revenues would be $157.3 million and net income would be $52.6 million. If capacity utilization stayed flat in 2010 at 80.7%, revenues would be $164.5 million and net income would be $55.2 million for $1.59 in EPS.
In summary, management has set themselves up for huge revenue and net income beats over the next two quarters on the same magnitude of what we just witnessed in Q2. We can also expect to have repeat huge beats of consensus revenue and EPS if our two research analysts decide to keep following management's lead instead of building their own bottoms-up revenue models. However, I think it is more than likely management increases guidance in short order to close the obvious gap after today's call. The math is just too simple to ignore.
Here is a normal case for the rest of the year. The only changes are the assumptions highlighted in orange.
After I have a chance to listen to the analyst conference call and speak with management, I will provide my own realistic estimates for 2010 and 2011 that are not sandbagged like the consensus estimates for 2010.
Disclosure: Author is long GFRE at the time of this writing
News 
Market Data 
Discover 
