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Randy Kirk, CFA  

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  • Yongye International: Profiting from China's Agriculture Needs [View article]
    Yongye lists as its competitors in its latest investor presentation two public co's China Green (CGA) and China Agritech (CAGC). Of these three firms, China Agitech appears the most undervalued, as it is building capacity of 20,000 tons per annum, versus capacity of around 10,000 tons per annum for CGA and YONG. Margins were about the same last year at YONG and CAGC (YONG was slightly higher but not much). But CAGC is selling about $100M less in market cap than YONG.

    According to the wikipedia page for Humic acid, Fulvic acid is basically similar to Fulvic acid. In CAGC's investor presentations CAGC boasts of a "proprietary" method of extracting Fulvic acid from Humic acid. YONG also states it has a "proprietary" technique of extracting Fulvic acid. It seems these three co's are approximately similar.
    Dec 2, 2009. 03:55 AM | Likes Like |Link to Comment
  • China Biologic: Why I'm Long [View article]
    I did a bit of research on supply of plasma in CBPO's latest 10-Q and 10-k:

    Supply from Guanxgi province: 2 collection centers online, waiting on the 3rd

    Supply from Shandong Province: CBPO has 5 of the 6 collection centers

    I haven't been able to find tons of supply from these existing centers in the 10-k.

    New potential acquisitions: waiting on an acquisition of supply centers in Guizhou and Shaanxi provinces.

    Do you have an opinion if these acquisitions will come through? Also do you know the supply from Shandong and Guangxi?

    Last note, CBPO states it will enact "more advanced collection techniques" at its supply centers, but really it seems to me this is mainly either advertising more or paying the donors more. Also it seems since the supply is voluntary there will be some variation in supply each year, although the co seems not to acknowledge this.

    Overall CBPO seems to have pinpointed the fact that supply of plasma is critical and it working pretty effectively towards securing more supply.
    Nov 30, 2009. 11:19 PM | Likes Like |Link to Comment
  • China Biologic: Why I'm Long [View article]
    Very interesting firm. Are you concerned at all about supply of plasma? It seems to me donation of blood plasma is voluntary (perhaps in China it's different than in the US)
    Nov 30, 2009. 10:11 PM | Likes Like |Link to Comment
  • Jim Welsh on the Economy: Past the Point of No Return [View article]
    An interesting aspect of the Morgan Stanley chart showing total debt as a percentage of gdp is that most of the debt increase from the 1950's to current occured in three sectors: household, financial and GSE. Most of this (I believe) should be in mortgages.

    GSE debt -- mainly Fannie and Freddie, includes the bonds on the liability side of the GSE's balance sheets. I can see Freddie had approx. $800Bn of bond debt in 2007 (2008 info unavailable) according to their 2007 10-k. These bonds were used to fund purchases of (conforming) mortgages.

    Consumer debt tends to be highly mortgage based, as houses are typically the largest component of most families net worth.

    Financial firms will include commercial banks which lend heavily to real estate.

    What is interesting is that GDP is calculated by the BEA mainly by summing up salaries, and then backing into GDP by using the formula Consumption = salaries - saving, for use in the formula for GDP = C+I+G+ Net Exports. (on this point, see the original discussion of GDP measurement by Nobel laureates Richard Stone and Simon Kuznets)

    So this shows that not even adjusting for median (not average) salary, credit risk is rising for the sectors that took on the most debt., -- this is more clarification on the most obvious factor that the overall national debt appears to be rising. As the increase in debt is based on the value of land, plus salaries, the crisis appears to be exacerbated by a) declines in land values and/or b) declines in average and median incomes. Conversely, the crisis should appear to be on the mend when a) land values stabilize and start to appreciate and/or b) median and average salaries start to stabilize and appreciate.

    May 6, 2009. 03:29 PM | 5 Likes Like |Link to Comment
  • Largest Companies in the World [View article]
    It's interesting to not see Citigroup and Bank of America listed among the top firms by market capitalization - when they are listed in the top 10 of the 2007 Forbes Global 2000 -- goes to show the effects of the current financial crisis. Interesting to see HSBC and the Chinese Banks not affected to nearly the degree as BofA and Citi.

    Also interesting to see that almost all the firms are down year to date except Wal-Mart and J&J. (would expect to see a higher percentage of larger firms, which are expected to be more "safe" than smaller firms, holding their own in a down market).
    Aug 26, 2008. 08:22 PM | 1 Like Like |Link to Comment
  • Mechel Trouble Spells Buying Opportunity for Gazprom [View article]
    Good article -- Gazprom is still absolutely in favor by the Russian government, as the former Chairman of Gazprom, Dmitry Medvedev, is now president of Russia! Also note, it is very likely that Gazprom will report significantly higher income through 2011, due to the fact that Russia is raising domestic gas prices by over 20% per year, in order to bring Russian natural gas prices to international levels by 2011 (right now Gazprom earns the majority of its net income from International (non-Russian) sales). Reference:

    ""Domestic prices are currently state-regulated and, accordingly, lag prices abroad. The domestic price is barely 20% the price abroad. But that difference will diminish steadily. The government has approved an increase of about 25% a year, but with the understanding that netback parity will be achieved from January 1, 2011," he said."

    The main concern with investment into Gazprom is the achievability of its next generation of natural gas supply, mainly Gazprom's projects on the Yamal Peninsula. These are likely to be expensive and technically difficult although there is little doubt that, geologically, massive reserves exist in the gas fields of Yamal.
    Jul 31, 2008. 05:06 PM | Likes Like |Link to Comment
  • Sinopec: Potential for Growth [View article]
    Thanks for that comment Ex15:26 -- Sinopec as a whole is not losing money currently, as Sinopec has 4 divisions, upstream, marketing, chemicals and refining -- and refining is losing money, the other divisions are profitable.

    The extent to which Sinopec's refining division is losing money is a complicated matter, which doesn't translate easily into the press -- I've addressed Sinopec's refining division in an earlier article which can be found here:

    I can comment, last quarter was a bit of a surprise in terms of the size of the refining losses, however, SNP didn't provide much detail on their other divisions -- I suspect that they are expensing a lot of exploratory expenses in their upstream division, which didn't show any profit growth in the first quarter (which was a surprise, as oil prices were up significantly). But as Tahe, Puguang (as mentioned in the article above) come online, E&P profits should increase.

    Overall, the Chinese oil majors tend to move a lot day to day, with moves of -/+5% not uncommon -- much of this I believe is due to the movement of the overall Chinese markets, which are very volatile.

    Note sentiment towards Sinopec is currently at a nadir, as most endowments and EU related funds have divested Sinopec due to the Sudan issue, and there is a lot of resentment towards SNP by western oil majors due to SNP's aggressive attitude towards international oil acquisitions. This filters down to articles in the press.

    In terms of a pair trade, I generally go long and hold for a longer period of time (well over a year) so can't predict short term moves. Also, I can't predict what will happen to the price of oil over the short term.
    Jun 2, 2008. 02:23 PM | Likes Like |Link to Comment
  • Sinopec: Potential for Growth [View article]
    CEO is more straightforward -- also a good buy (in my opinion) -- CEO doesn't have the refining issues or the Sudan issues of Sinopec. Sinopec is selling at a slightly lower market capitalization than CEO currently -- unusual for an integrated oil major to sell at approximately $80Bn that is ranked #22 on Forbes Global ranking of the world's 500 largest companies.

    The relatively low market capitalization of Sinopec is I believe is mainly due to three issues
    1. Refining division -- this is currently losing money, although how much and what sort of subsidies and future price increases in the price of petrol within China is a point of debate

    2. Sudan divestment -- PetroChina is much more active in Sudan than Sinopec, (any activity there could be construed as a legitimate reason to sell however) and most funds and endowments which have divested PetroChina due to the Sudan have also divested Sinopec.

    3. International oil community resentment of Sinopec -- Sinopec has been very aggressive in bidding for international oil projects, which has driven up the price of oil projects for all oil majors -- this has led to a negative attitude in general towards SNP by oil majors and western oil publications.

    May 28, 2008. 01:41 PM | Likes Like |Link to Comment
  • Oil Looks Toppy - Time to Short? [View article]
    Oil is highly priced because of the marginal utility of each extra unit of oil. "Why are diamonds, which are frivolous, expensive while water, while necessary for life, is inexpensive?" - Adam Smith asked this -- also known as the Paradox of Value. Economists more or less believe the solution to the Paradox of Value lies in the concept of marginal utility, as each additional unit of water was not valuable, because there was no shortage. If there is a shortage of oil currently, then it makes sense that oil is highly priced since it is significantly price inelastic.
    May 28, 2008. 01:15 PM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    Note: Correction in the comments section above: Gazprom's President and CEO's name is "Alexei Miller" not "Andre Miller," and Viktor Zubkov, current head of the cabinet, is widely expected to be elected Chairman of Gazprom in June, allowing Miller to concentrate on his role as President. see:
    May 27, 2008. 06:00 PM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    George2000, thanks for that comment. The Shtokman gas field is very large with an estimated 3.8 tcm of reserves -- equivalent to approximately 24 billion barrels of oil equivalent -- note however that the Shtokman field is not the largest known offshore gas field in the world (as has been reported in some circles) as the South Pars Natural Gas field split geographically between Iran and Qatar is significantly larger, at an estimated 51 tcm of natural gas reserves.
    Shtokman therefore appears to be in the same range in terms of reserves as Gazprom's existing four producing fields.

    Further, as a background, Shtokman should also be placed in perspective in terms of its potential for the Barents Sea: there is a map of potential gas and oil fields here in the Barents and Kara Seas: www.environmenttimes.n...
    Gazprom officials have stated that there will be "significantly more" natural gas reserves in the Kara Sea, to the East of the Barents Sea. There is also likely to be more discoveries in the Russian and Scandinavian territories of the Barents Sea, in addition to Shtokman.

    Shtokman appears to be moving forward currently - there has been serious criticism of Gazprom that it will not be able to develop Shtokman on time (with the first phase slated for 2013-2014), some of this criticism stemming from Gazprom's announcement that it would develop Shtokman alone in mid 2006. However, several observers, including the Russian Investment bank UralSib and the Jamestown Foundation, stated that this announcement was more a bargaining move to extract better terms from international partners (see: Gazprom has announced the signing of Total at 25% and StatoilHydro at 24% ownership of Phase 1 of Shtokman at the beginning of this year.

    Shtokman is intended to be developed in 4 phases, with the first phase planned to be completed by 2014, and between 20-30 bcm of natural gas produced during phase 1. Costs for phase 1 are estimated between $15B and $20B -- but could go higher. It is noted that StatoilHydro developed the only other offshore Barents Sea gas field Snohvit, significantly closer to land and significantly smaller at approx. 200 bcm of reserves was completed for a final price tag of approx $10Bn. see for information on Snohvit: (note that StatoilHydro developed Snohvit, gaining expertise that will be valuable in producing Shtokman): www.offshore-technolog.../

    After phase 1, current agreements are for Gazprom to buy out both Total and StatoilHydro from the project. Each phase is planned to add approximately 23.7 bcm of natural gas production per year -- 23.7 bcm is approximately equal to 410,000 barrels of oil equivalent per day. (see
    for reference)

    Most likely, the project will be somewhat delayed due to the fact that the field lies in very difficult conditions, 650 km away from the mainland -- so it is theorized that a refueling station for helicopters will have to be built, and the underwater terrain is reported to be uneven. The Russian newspaper Kommersant reported on May 6, 2008 that StatoilHydro "doubts" that Shtokman will start up as planned in 2013. How much delay past 2013 is not known at this time.

    Overall, Shtokman is an important future project for Gazprom, with a possible 70 bcm of annual production by 2020, compared to a current production of approximately 550 bcm. It should be noted that Shtokman production is not included in the official Gazprom projections presented above, -- Shtokman is distinct from the Ob and Taz Bay regions and the Offshore Yamal Peninsula regions indicated in the projections. I don't know why Gazprom did not include Shtokman in its official projections.
    May 27, 2008. 05:54 PM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    Adamnb -- thanks for the compliment, -- you can contact me at kirkrm (at) -- or follow the link above to my blog which has my email address. Although I'm not always right -- however try to get my reasoning right -- as Robert Rubin says, there's always a probability that the investment won't work out, but over the long haul you'll be do well if you have solid reasoning for your investment decision.
    May 19, 2008. 12:32 PM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    Medvedev has actually been serving as Deputy Prime Minister as well as Chairman of Gazprom prior to his election as President -- although recently Andre Miller -- currently the CEO of Gazprom -- has been named Chairman, replacing Medvedev. There is a debate within Russia on how much power Medvedev actually will have, given that Putin has been sworn in as Prime Minister. However, Medvedev does represent the "pro-Gazprom" faction -- mainly verses Gazprom's main rival firm, Rosneft -- and is expected to influence the government to award many new oil and gas discoveries to Gazprom. This can be seen in the development of Sakhalin Island, which two years ago was more the domain of Rosneft, but last year Gazprom bought a majority share in Sakhalin 2, after environmental and tax authorities levied fines on the existing operators, making it more convenient for them to sell their shares to Gazprom. Currently, Gazprom is maneuvering to buy a majority stake in Sakhalin 1 (as I noted above) and in addition, control distribution of natural gas from Sakhalin -- the governmental support will assist in Gazprom achieving these objectives, most likely.
    May 15, 2008. 12:56 AM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    Thanks Adamnb. My understanding of Sakhalin, is that Rosneft holds a larger position in the overall development although Gazprom wants to overturn this (and has the political will to do so). Gazprom is relatively new in the project having acquired a 50% plus 1 stake last year at Sakhalin 2. Sakhalin is being developed in 4 phases, with Rosneft and Exxon controling Sakhalin 1, which is up and running currently with an estimated 250,000 barrels per day of oil production and also 140 M mcfe a day of natural gas (reference: Gazprom is not currently participating in Sakhalin 1 although wants to buy out Exxon's stake (Exxon at 30%, Rosneft at 20% ownership, of Sakhalin 1).

    Gazprom is planning to start shipping LNG from Sakhalin 2 in 2009, at an estimated 9.6M tonnes annual rate, which is approximately equal to 84,000 barrels per day of oil equivalent -- Gazprom will get 50% of the revenues from this so this means it will likely not be a major percentage of overall production (as Gazprom's natural gas production is equivalent to approx. 9.5 M barrels per day oil equivalent). I am not sure if the production levels are expected to increase going forward.

    Gazprom is also positioning itself to control all delivery of natural gas from Sakhalin -- whether produced by a Rosneft led consortium or not -- and so, if successful, this would be a boost to Gazprom's downstream segment.

    Overall, Sakhalin is a potentially large oil and gas production region as the EIA estimates that there are approximately 12 bn barrels of oil and 90 tcf of natural gas (approximately 15 bn barrels of oil equiv) of reserves -- it is not clear if this is recoverable oil or oil in place, however. What is potentially interesting from an investor's standpoint (in my opinion) is if Gazprom Neft participates in Sakhalin 2 -- currently Gazprom Neft is participating in exploratory work in Sakhalin 4, which is not expected to come online for several years. Gazprom Neft generally produces the majority of Gazprom's oil production, and there should be significant oil production at Sakhalin 2 with an estimated 1 billion barrels of liquids reserves estimated (in addition to the 3 bn barrels of oil equivalent in natural gas reserves (see: - -however the liquids may be "natural gas liquids" in which case Gazprom would likely not bring in Gazprom Neft. Note that Gazprom Neft trades as a separate company -- 75% owned by Gazprom, ticker: GZPFY.

    Overall Sakhalin should be placed in perspective to the Yamal Peninsula, as shown in Figure 4 in the article above, Yamal is a much larger reserve area, -- although Sakhalin in that figure only includes Gazprom's 50% ownership of Sakhalin 2, if Gazprom moves into Sakhalin 1 then Figure 4's estimated reserves would increase.
    May 14, 2008. 02:18 PM | Likes Like |Link to Comment
  • Can Gazprom Realistically Meet Its Natural Gas Projections? [View article]
    Turkmenistan is an interesting case - Gazprom currently transits approximately 50 bcm per year from Turkmenistan (compared to Gazprom's own production of approximately 550 bcm)(note that certain sources disagree on the total amount transited from Turkmenistan) and collects a good margin on these sales. I'll estimate the amount of profit Gazprom derives from Turkmenistan sales here (as Gazprom does not disclose this): assuming about a 30% margin on natural gas sales from Turkmenistan (30% margin is the price paid to Turkmenistan minus transit costs and tariffs) the calculation is:

    50 bcm annual transit* 30% margin, price of $9.00 per mcfe, = approximately $US2.0Bn annual profit to Gazprom from Turkmenistan's production. This would comprise about 8.3% of Gazprom's expected net profit for 2007 of $US24Bn (official Gazprom results will be released May 15, 2008)

    Also to put Turkmen production in perspective: Turkmenistan is producing about 63 bcm per year according to the EIA while Gazprom produces 550 bcm annually.

    In Chart 1 above, Turkmenistan gas is part of the "gray area" in the projections, -- the other parts of the gray area are non-Gazprom owned natural gas production -- such as Lukoil and Rosneft production of natural gas (which is growing) -- Gazprom estimates that Russian independent production ie Lukoil and Rosneft, etc of natural gas will grow to 82 bcm annually in 2010 from 62 bcm annually in 2006 (reference: eng.gazpromquestions.r...). The gray area in Chart 1 above also includes future natural gas production from other Central Asian countries -- mainly Kazakhstan.

    In Chart 2 above, Gazprom's official projections, Turkmenistan gas is not included as the transit profit is included in Gazprom's pipeline segment -- Gazprom believes it can increase production without additional supplies of gas from Turkmenistan.

    Turkmenistan and Gazprom signed a 25 year supply agreement in 2003 for approximately 80 bcm per year of natural gas sales, -- however Turkmenistan is only delivering approximately 50 bcm in 2007 according to the Russian i-bank Troika Dialog -- with the price I believe undisclosed. Turkmenistan is also targeting Chinese sales through development of new fields -- estimated at 40 bcm per year with a new agreement with PetroChina beginning in the 2010 time range. Turkmenistan has also targeted India and Iran for future natural gas sales through new projects. Overall Turkmenistan has ambitious growth targets, at over 100 bcm of production by 2010.

    I noted Turkmenistan has a UK based geological firm Gaffney Cline currently auditing their reserves of natural gas, which is expected to be completed by the end of 2008 -- by this time, there will be more clarity whether or not Turkmenistan can meet its Russian and Chinese (and Indian and Iranian) prospects. I noted that Chinese petroleum geologists have audited their section of Turkmenistan's gas fields and have found significantly more natural gas (1.6 tcm) than Turkmen specialists (source: Turkmenistan Plays with Europe's Gas Hopes, Asia Pulse, March 13, 2008) -- this gives some initial confidence than Turkmenistan can meet its proposed projects, but again more confidence will either be gained or not at the end of 2008 when Gaffney Cline completes its audit.
    May 13, 2008. 05:34 PM | Likes Like |Link to Comment