japanese distributor holds 25 percen of cmp

Sleeper awakes a little earlyMathew Charles

January 04, 2007 12:00am
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SHARES in sleep disorder specialist Compumedics soared more than 20 per cent yesterday ahead of a price-sensitive announcement that was released to the market after the close of trade.

The rise added to a nearly 4 per cent improvement in the share price on Tuesday.
The stock finished the day 21.21 per cent higher, up 3.5 at 20.

The rises occurred before the announcement - relating to a new joint venture - was released to the market.

But chief executive David Burton said there was no way the information had leaked into the market.

"My answer to that is that I don't think that happens at Compumedics and historically we will testify to that," Mr Burton told Business Daily.

"We are the least exposed to that sort of behaviour."

Mr Burton stressed that the company had developed a strong emphasis on ethical behaviour over the past 20 years.

He said the market had undervalued the stock and now that signs were emerging of a turnaround, the share price had acted like a "suppressed spring".

"It's a return to a natural value," he said of yesterday's share price rise.

"We are proving the recovery is sound and founded and not transient."

He said the reason why Compumedic's share price had wilted as low as 6 - after being worth more than $1 - was "because the market factored in the downside and did not factor in the upside".

In addition, Compumedics is a very thinly traded stock with only about 11 per cent of scrip traded.
Mr Burton controls about 64 per cent of the company, while 20 to 25 per cent is held by Compumedics's Japanese distributor, key employees and doctors in the field.

Yesterday's announcement revealed a new joint venture between Compumedics, a Melbourne dentist and US-based group Health Technology.

The new company will see Compumedics increase its market reach to include dentists in the fight against sleep disorders such as apnoea.

Compumedics estimates the sleep disorders market is worth at least $250 million and growing.

Compumedics listed on the share market in 2000 and, for several years, performed well before its fortunes soured -- which Mr Burton described as "hiccups" -- despite controlling about 70 per cent of the Australian market.

Last year the bottom line lifted 65 per cent to a $1.5 million loss after reporting a $4.6 million loss in 2004-05.

Mr Burton said the company had not been issued with a please explain notice from the Australian Securities Exchange.

Both the ASX and the Australian Securities and Investments Commission declined to comment.