Here is what The Australian wrote about QTM. They are warning...

Here is what The Australian wrote about QTM. They are warning people to be careful! They did an article on it yesterday saying it was overvalued but people didn't understand the authors' satire and thought the author was bullish on the stock.


Quantum theory tested

July 24, 2003
SATIRE is dead!

A little story about miracle stock Quantum Energy ran on the front of this finance section yesterday.

Bloomberg, using transcription service Palamedia, carried the yarn and reported in glowing terms that Quantum's investors were "optimistic about the future". Glowing stuff.

The stock rallied yesterday, up 6c to 76c. Taking into account the 62 million shares on issue, Quantum's market cap is $47 million.

Incidentally, you won't find it on Bloomberg or Iris too easily but there is also a bit more Quantum stock around. A lazy 800 million shares in escrow.

Of course, as that stock is in escrow neither the ASX, ASIC, the wire services or Quantum count this holding in valuing the company because the shares can't be traded for another two years.

Were one – and this might be little conservative – to include all the shares on issue then one might find Quantum's market worth was $650 million. Quite remarkable for a company whose swimming pool heating and hot water systems business was in the hands of administrators two years ago.

In fact, in view of the stated property, plant and equipment of $815,886 this is an estimable trading performance, indeed. Last week, when the stock soared above $1.11, Quantum was capped at almost $1 billion.

Something to escrow about

WHO is to be congratulated then? Chairman Leo Respinger deserves a big slap on the back. A huge slap.

Leo bounced back with aplomb from the Network Entertainment disaster (his last float which went kaput very quickly) and Musgrave Block (a South Australian minerals play which raised money but never got off the ground).

Undeterred, Leo exhumed a solar heating business in Newcastle from the grave, sold it into Quantum for $61 million (taken in scrip via Crisp which has 760 million of the escrowed shares), set up two joint ventures in China, raised $4 million by floating Quantum a couple of months back and took the market cap to almost a $1 billion in three months.

Now, according to the prospectus – that fat bit in front of the application form for the float – "Quantum's global expansion strategy is geared to Asia, North America, Europe and the African markets". Sadly, Paraguay and French Guyana may well miss out on this "major market force in the global renewable energy industry".

Inspired work rewarded

CRISP work also by Crisp's other identities, Quantum MD Phil Sidney and director Drew Townsend. Though stockbroker Bell Potter must not escape without praise. For Bell not only floated Quantum but also had the foresight to provide its team with an incentive.

Bell has 16 million options in Quantum which are excercisable at 25c right now! Already! No escrow!

Nice work. There's even a deal with Phil and Leo by which it has an option to purchase their non-escrowed shares. And which it surely did a few weeks ago at 25c off market when Quantum was trading around 70c. Legends.

Honourable mention also goes to investigating accountant Hall Chadwick, for which Leo often does a bit of work. And whoever it was who concocted the propectus is a hero. Look to "Additional Information" for most of the good stuff.

Rat-a-tat chat spreads word

PHIL Sydney told us yesterday that, given the enormous growth potential of the Chinese and global markets, the substantial cost savings from Quantum's energy efficient products, the progress of the company had been encouraging.

Quantum hasn't done it entirely on its own though. Without the mysterious Crove, Doc, Homer, Krill, Big K and Frespirit in the Commsec chatroom, and without Gominer, Goblin and Hook on Hot Copper the market could not possibly be as well informed about Quantum's spectacular pending news.

Just $14 million has been announced to date, officially, from Quantum's contracts in China.

Hirdy, one of Crove's correspondents and a keen follower of Quantum said yesterday: "We are talking huge returns . . . I feel that over the next two weeks we are going to see them creep up again in to the 90c and $1 range."

You won't get any argument from Crove, who is hanging out for a slather of contracts from Australian governments, not to mention some big news from China "with QTM grabbing near $50 million of new contracts. QTM is a very profitable company making 20 per cent profit per month and it looks like making a profit of around $19 million to $20 million by the year end".

As Crove says: "It's a biggie."

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