outstanding quarter; turnaround story, page-6

Hi Mav
Great to have your input.I?ve been feeling pretty lonely here on the QTM thread. I really appreciate having your thoughts.
One of the difficulties with QTM is that they don?t provide a lot of information. Over the past 2 years, apart from AGMs I don?t think they have ever done an investor presentation, or made any other serious attempt to educate potential investors. Consequently, there is a certain level of guess work in interpreting what they do provide. For example while I think the figures for the most recent quarter are impressive, there is no clarity regarding what proportion relates to the heating systems and medical technologies respectively.
Re. CRISP holdings ? don?t know who they are. However I have been watching the company for over a year, and seem to recall forming the impression (most likely from an earlier annual report), that CRISP is owned primarily by some combination of the current directors.
Re. RECs ? They are a risk given that they are traded on market. I would imagine QTM manages the risk by selling as close as possible in time to when they purchase from customer. Furthermore, the ever changing subsidies/rebates in this area, has I think been a major problem for QTM. E.g people delay purchases; difficult to market products without certainty re. rebates.
Re. family run business ? seems to me a 2 edged sword. On the down side, lack of transparency/perhaps perception that shareholders should feel lucky to be included/ - on the up side as you say they have ?skin in the game?. Generally though in regard to QTM, it looks to me that they have taken a lot of financial risk to build the company with their own money. Despite the increase in executive remuneration in 2010, exec salaries are not that high.
Corporate raised the issue that September quarter look better then is the actual case because costs might have been lower due to sale of inventories built up from previous quarters. This may be the case. But revenue significantly increased (which is independent of inventories), and I did a quick scan of ratio between costs and revenue which seemed to be fairly consistent when comparing quarter to ratio over time. However this was based just on a scan of figures, not a detailed examination. Again the lack of information provided historically by QTM is an impediment.
Generally when investing, I largely depend on what information is made available by companies and what is proved by brokers and others following companies. Both are somewhat lacking in regard to QTM, which would normally be a pretty significant barrier to my investing. However the risk/reward balance based on the following is what has persuaded me to invest in this case:
- Great product with unique advantages in growing market (over time energy costs are going up and solar alternatives will become increasingly attractive; QTM?s products have distinct advantages regarding solar requirements, durability and cost savings compared to flat plate solar systems)
- Low cost manufacturing base in China
- Based on earnings prior to past year, and reported increased earnings over past two quarters, it appears company is heading back towards a P/E well under 10, with low debt and great potential for expansion
- Current share price has fallen significantly because of uncertainty in government policy, as well as previous legal dispute with Phillips re medical technologies (now resolved)