G-Resources: One Sixth Of Liquidation Value And Prior Management Gone

Summary

• G-Resources seems to be an extremely cheap stock trading at 1/6 of liquidation value.
• Prior management sold most of their stake in a block sale in May and resigned from board and executive officer positions.
• Market responded favorably to the sale for a few weeks, but stock has since sold off and is touching lows.
• Possible reasons the opportunity exists include: China selloff, risk of total loss, stigma around the Martabe sale, etc.
• This article is a call to action for “diggers” to get the full story, contact the relevant parties, and ensure outside investor interests are respected.

Please see the disclosure at the bottom of this article. The investment organization with which I am affiliated has owned shares of G-Resources for several months. This investment organization has not purchased shares within the last few months, nor is it the current intention of the fund manager to sell any of its position, not only within the next 72 hours per Seeking Alpha standard disclosure, but also within the next few months. (The fund manager very well might buy shares after the 72-hour period.) This article is not investment advice.

G-Resources (OTCPK:GGPXF) (listed in Hong Kong, ticker: 1051 HK) seems to be an extremely cheap stock. The stock price is 0.058 HKD/sh and market cap is $200mm USD. (All dollar amounts referred to in this article will be US dollars.) Taking into consideration all of the risks and discounting for time, I believe it is worth at least 0.165 / $570mm today, 185% above its current trading value. To be clear, this may be a very risky idea, but I believe expected value is well above the current price and the gap between the current market price and expected value is among the most attractive of any of the very large number of stocks I follow.

Background

G-Resources is an investment holding company listed and based in Hong Kong; it has 45 employees. It is domiciled in Bermuda (very common for HK companies). Take note that their reporting currency is USD and I believe much of their assets are USD-denominated as well, but being listed in Hong Kong, the stock trades in HKD. The going HKD/USD rate is 7.831.

They have a basic IR site and are on linkedin although the linkedin employee count and description seems like it hasn’t been updated since they sold their main asset

Analyst’s Disclosure: I am/we are long GGPXF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information contained on this article is not and should not be construed as investment advice, and does not purport to be and does not express any opinion as to the price at which the securities of any company may trade at any time. The information and opinions provided herein should not be taken as specific advice on the merits of any investment decision. Investors should make their own decisions regarding the prospects of any company discussed herein based on such investors’ own review of publicly available information and should not rely on the information contained herein. The information contained in this article has been prepared based on publicly available information and proprietary research. The author does not guarantee the accuracy or completeness of the information provided in this document. All statements and expressions herein are the sole opinion of the author and are subject to change without notice. Any projections, market outlooks or estimates herein are forward-looking statements and are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. Except where otherwise indicated, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the author undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional materials. The author, the author’s affiliates, and clients of the author’s affiliates may currently have long or short positions in the securities of certain of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions. Neither the author nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. In addition, nothing presented herein shall constitute an offer to sell or the solicitation of any offer to buy any security.