a revenue generator

At a touch over $45million (6.2cents)in fully diluted market cap Anteo Diagnostics should start to get the curiosity of the average small cap revenue generator type investor.

Having researched the Price Earnings Ratio's of a number of biotec company's overseas, it is important to understand the rerating that occurs when a biotec turns into a positive cash flow generator.

With price earnings ratios ranging between 12-18 biotecs seem to wether the storm of market turbulence quite well. I guess this is attributable to the growing populations and the fact that us humans always seem to be getting sick.

Now whilst those of us with a learned passion for this stock await news of further positive developments (we hope) its important to understand the fundamental transition in operating cash flows that may have already taken place.

Anteo's operating costs will not increase very much unless they decide to flex the project development arm of the business or something similar. Bangs have now been selling Mix&Go for 4mths. Based upon a normal 90-120 business cycle it could be expected that revenues from this deal may now start flowing through to the Company.

I would expect this to become clearer in the September quarterly.

Although a certain level of anticipation is being built into the momentum of this stock I would also hasten to add that based on the PE ratios above, ADO's current market cap is pricing in earnings of around $4million at this stage.

This is an important consideration in analysing this Company's potential fortunes.

Why?
Because with each additional deal and limited increases to the Company's cost base, each addditional revenue stream is effectively a banker and can almost entirely by attributed to the PE calcuation.

Remember the interim goal of this Company was to penetrate the diagnostics market over the next couple of years in a big way. Revenue streams from this set of markets could be expected to exceed $100million pa easily should the product continue to yield favourable feedback.

Bank most of that and you could well be looking at $1 share price on the Diagnostics Industry alone.

Its many other commercial applications could very well multiply this figure.

So yes we all wait with baited breath as to a sign of more positive developments. But do not loose sight of the potential impact current unterflowing revenue streams may already be having on this Company's valuation.

Anyone involved in Commercial agreements and discussions knows it can take time. I guess its up to the individual as to how much time they are prepared to wait. Given the potential re-rating effects of new deals, this little investor is here for the long run.

IMO
DYOR