Chairm's Message
"Dear stockholders:

Ten years ago, when Gulf Resources went public in the United States, we dreamed of building a successful company that would grow and provide our shareholders with strong returns. During that time, our management has done an outstanding job of building our company.


·         Sales have grown from $31.7 million to $162.3 million.

·         Income has grown from $3.8 million to $34.1 million.

·         EPS has grown from $0.0 to $0.75.

·         Shareholders equity has grown from $8.2 million to $338.1 million.

·         Book value per share has grown from $0.09 to $7.31.

·         Cash has grown from $5 million to $133 million.

·         Cash flow has totaled $386 million.


I am very proud of our team and the financial results they have produced.


Still, our strong financial results, our stock has languished. Our shares are selling at 21% of book value, and a discount to our net net cash.  Our P/E is 2x. We believe there are no other companies with our record selling at these low valuations.


We know investors are frustrated by the low stock price, but so is the entire management team. Members of management have very low salaries. Our CEO, CFO, and COO are paid $48,843, $32,139, and $32,139 respectively. Executives at comparably sized companies in the U.S. are paid 10x this amount. I was paid $37,414 last year to serve as Chairman. We have worked for years for very low salaries in the hope that the price of our shares will compensate us for our efforts. Our only hope is to see the stock price increase significantly.


In the last year, I have talked to investment bankers and consultants to see what we could do about the stock price. They have told me the following:

1.      U.S. investors do not like small capitalization Chinese stocks.

2.      Other exchanges, such as Hong Kong, require a minimum capitalization of $300 million.

3.      Paying a dividend would help, but many small Chinese companies that pay dividends are selling at yields over 10%.

4.      We need to develop a comprehensive strategy to massively improve our earnings, gain the support of institutional investors, and explore ways of returning capital to shareholders.


As these investment bankers and consultants analyzed our business, they made the following recommendations.


1.      Given the vast potential of our natural gas project in Sichuan, we should attempt to develop as many wells as possible. If we could drill more than 30- wells, we would have enough earnings to attract major institutional investors or become large enough to list on another exchange, where our company would probably be able to get a fair value.

2.      If we were able to successfully drill this many wells, we could also form partnerships with major Chinese or international oil companies, which could be a huge benefit to our shareholders.

3.      Paying dividends is difficult, because the Chinese government is trying to restrict the flow of capital out of the country. However, if we could develop an export business or make acquisitions outside of China, we would then have more flexibility to pay dividends or buyback stock.


We are working on strategies that will allow us to accomplish these goals.


We have a long-term view of the opportunities ahead of us. The bromine and chemical businesses are strong, despite the slowdown in the economy. The opportunity in Sichuan could be very large. If everything works as we hope, we could one day have earnings per share many times higher than our current level.


We also understand that U.S. investors do not have the same time frame that we have and would like to see the stock price appreciate sooner rather than later. We are working very hard to help make this happen. We are working with professionals in the U.S. equity market and studying every possible way of gaining sponsorship and a higher stock price. We have numerous strategies for making this happen.


We know that asking for patience will not help. However, we want you all to know that management and other major shareholders own almost 50% of the stock. We are all major shareholders and we are focused on a number of strategies that we believe will provide strong returns to our shareholders in the future.


We are very excited about the opportunities ahead of us in 2016 and think this may be the year that our management team starts to be rewarded for its hard work and our investors start to be rewarded for their patience.


BOD Chairman