cmq - 50 to 75c valuation MiscMan,totally agree with your...

cmq - 50 to 75c valuation MiscMan,

totally agree with your comment:

>They will buy back when CMQ gets the plant working, gets their full manufacturing licence, gets rid of the remaining management and gets some sale orders going thru.
>Yep then they'll buy back, but in the meantime, it's not going to recover.


This is a direct slap in the face to Graham Melrose.
The problem is there is no one left to run the company if he steps aside.

The company spends $1.5M per month, and has net cash of $11.5M.

ASIC will be looking to fine them about $3M.

Even if they get production going this financial year, on these figures it is unlikely they will have enough cash to see them past June 2005.

They are clearly going to need another capital raising, while the current plant gets up to speed and build the 50t expansion. The problem is they had a hard enough time last time, finding a broker who would underwrite the raising. This time is going to be even harder.

I can't really see how this company can fix itself up.

How can Melrose step aside? There is no-one left to takeover.

Maybe another company will put in an offer to buy their technology, but if I was an interested party, I'd be waiting to buy this off the administrators in June.

Even if a merger were to take place, the valuation of CMQ would have to be far below the current market cap. Why does a company with a pre-order for $2M, an unfinished factory and land with a value of $66M, no manufacturing licence, and limited cash reserves, have a market cap of $126M ?

The fundamental valuation of Chemeq, in my opinion, has decreased. $68M / 100Million shares = $0.68

To my mind, a share price of 50-75c is likely.

My inclination is toward the lower end in the mid-term because a share issue would further dilute shareholder value.


Joel

.Figures for the factory and land valuation were taken from the 2004 annual report.