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SHOUGUANG, China - Gulf Resources, Inc. (NASDAQ:GURE), a major producer of bromine, crude salt, and specialty chemicals, has reported a significant recovery in bromine prices in the early months of 2025 following a challenging previous year. The company’s stock has reflected this improvement, posting a strong 37.4% year-to-date return according to InvestingPro data, though current analysis suggests the stock remains undervalued. In 2024, the company’s bromine segment experienced a net loss of $8.2 million on revenues of $5.5 million, primarily due to a substantial drop in bromine prices and sales volume. InvestingPro data reveals the severity of this downturn, with total revenue declining 74.5% and gross profit margins falling to -208.4% in the last twelve months. These challenges are reflected in InvestingPro’s Financial Health Score of 1.62, indicating significant operational pressures.
The average bromine price in 2024 was RMB 17,561 per tonne, marking a 27.1% decrease from 2023 and a 67.3% fall from 2022. Sales volume also declined by 71.7% year-over-year, leading to an 83.4% rise in cost per tonne as fixed costs were distributed over a smaller production base.
However, the situation appears to have improved significantly since the start of 2025. After a seasonal winter shutdown, bromine prices have risen from RMB 21,900 per tonne at the end of February to approximately RMB 29,000 in March. In the first half of April, prices increased further to RMB 37,500 per tonne, representing a 61.9% price increase since the beginning of the year, according to data from sunsirs.com.
Gulf Resources anticipates its bromine segment to be highly profitable and generate strong free cash flow if current price levels hold. The company is also optimistic about receiving approval to reopen Factories #2 and #10, which, along with investments in flood control infrastructure and new land acquisitions, are expected to support increased production capacity.
Despite the pressures on the broader Chinese economy, overall bromine production capacity in China is believed to be lower than in previous years, mainly due to government-mandated closures of several bromine mines and factories for environmental compliance. While the company trades at a notably low Price/Book ratio of 0.06, InvestingPro subscribers can access 10 additional key insights about Gulf Resources’ valuation and future prospects.
The information for this report is based on a press release statement from Gulf Resources, Inc.
In other recent news, Gulf Resources, Inc. has completed the acquisition of crude salt fields in Shandong province, China. This transaction was finalized by its subsidiary, Shouguang Hengde Salt Industry Co. Ltd, with multiple sellers as per agreements initially set in June 2024 and later amended in December 2024. As part of the acquisition, Gulf Resources issued 2,059,694 shares of its common stock at $1.50 per share to individuals designated by the sellers. These shares were issued under an exemption from registration, as the recipients are residents of China. The acquisition expands Gulf Resources’ asset portfolio and represents a strategic growth step for the company. Specific details about the sellers and terms of the agreements were not disclosed. This information was reported in an 8-K filing with the United States Securities and Exchange Commission.
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