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
QTM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held