Ferret's Stock to Watch: QUANTUM ENERGY LIMITED08:27, Tuesday,...

Ferret's Stock to Watch: QUANTUM ENERGY LIMITED
08:27, Tuesday, 12 April 2005

A SMALL TECHNOLOGY DEVELOPER GOING IN THE RIGHT DIRECTION

Sydney - Tuesday - April 12: (RWE Aust Business News)
*****************************************************

OVERVIEW
********

Quantum Energy Ltd (QTM) set itself a tough goal to achieve in
2003 in breaking into the China market, and is still working on it.

The company's technologies have been invented and developed in
Australia, and its manufacturing plants are based in Newcastle, NSW, and
China.

Quantum's product range consists of solar hot water and central
heating systems and swimming pool heaters.

Its systems extract heat from the ambient air, enabling hot water
to be produced continuously 24 hours a day in a range of geographical and
climatic conditions, making it suitable worldwide.

And unlike certain other solar hot water systems, Quantum's
products do not require solar panels or direct sunlight and can even
operate in rain, snow and on cloudy days.

Phil Sidney, Quantum's managing director, says the opportunities
for Quantum are "immense."

Well, the company still has a long way to go, but it slowly
getting there if earnings and technical progress are any criteria.

Yesterday Quantum reported to the ASX that it had made a "major
leap forward" via its Research & Development department.

The New Star air-sourced range of products, which is fast
becoming our biggest selling product in China, has had its capability
improved substantially.

"Whilst previously we could generate heated water in
temperatures of -12C, the new achievement will mean our products will
operate in temperatures as low as -20C" the company says.

In another announcement, Quantum said the initial demand for the
New Star product had meant it was necessary to increase production
capability in China.

A bank loan has been negotiated for 2 million RMB to assist the
process, Mr Sidney declared.

SHARE PRICE MOVEMENTS
*********************

Shares of Quantum rose 0.5c to 13.5c yesterday. Rolling high for
the year has been 38.5c and low 13c.

In the half year to December 31, consolidated net loss was
reduced to $184,321 against a deficit of $2.03 million in the same period
a year ago.

Directors pointed out it was a considerable improvement which
should continue for the following reasons:

* The continued success of Quantum's domestic and commercial hot
water systems in Australia.

* The material cost of products has decreased and methods of
production improved, reducing overall manufacturing costs.

The company has made significant advances during the last six
months, which include the following:

* Production capacity has increased considerably in Australia.

* Revenue in Australia increased by 49 per cent reflecting
improvements in domestic and commercial product quality and enhanced
distribution channels.

* Operations in China were restructured with new products
introduced which are more suitable for that market, which will support
the development of these joint ventures.

* Sales for demonstration trials have been made to Korea and the
company is in the process of arranging distribution in other Asian
countries.

* Finance sources to support growth have been arranged during the
period with $7.5 million of equity and finance lines entered into.

FUTURE OUTLOOK
**************

The first half-year results improved substantially and directors
are confident that the result in the second half of the year will show a
further improvement.

Apart from the sales initiatives mentioned under the review of
operations, the business has:

* Identified a number of opportunities to reduce raw material
component costs.

* Further tightened stock control.

* Improved the management team in the Yunnan Quantum business, so
that opportunities are maximised and sales growth is properly managed.

* Benefited from the push by Federal, State and Local Government
for energy efficient solar hot water systems to replace electric systems.

BACKGROUND
**********

Quantum Energy Technologies Pty Ltd is a wholly owned subsidiary
of Quantum Energy Ltd which listed on the Australian Stock Exchange in
June 2003.

The company is described as a leading innovator and manufacturer
of advanced renewable energy water, building and pool heating products
for residential, commercial and industrial applications.

Quantum Energy owns all the issued shares in Quantum Energy
Technologies Pty Ltd, which owns 51 per cent of the shares in Yunnan Hua
Teng New Energy Company Ltd.

The origins of the company go back to the mid 1970's when
extensive research work was done by the University of Melbourne in the
development of Heat Pump technology for the production of hot water.

Since that time the product has been progressively developed and
expanded to the position where today the QUANTUM hot water heater is now
recognised as one of the most energy efficient system available.

In 2002-03 Quantum commenced manufacturing and distribution
businesses with Chinese partners in Shandong and Yunnan provinces.

Introducing Quantum systems can significantly reduce the
emissions of environmentally damaging greenhouse gases.

Hot water systems comprise the largest sector of the global
appliance market.

The Australian market is very strong and each year alone
approximately 700,000 hot water systems are installed.

With the assistance of incentives from Federal and State
governments, and the strong support of local councils and authorities,
the company expects to continue to achieve an increase in market share on
an ongoing and sustainable basis.

Phil Sidney said another major catalyst for strong growth was
Quantum's joint venture with Sinopec, China's largest company and largest
oil producer and distributor of petroleum products.

In recent times, Quantum has exported solar hot water systems to
countries including China, Italy, Malaysia, Singapore, Fiji and New
Zealand.

Some of the company's most prestigious installations included the
Raffles Hotel, Royal Crowne Plaza in Singapore and the Lindeman Island
Resort in Queensland.

ENDS

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I don't hold QTM