CMQ 0.00% 8.3¢ chemeq limited

overlooked fundamentals

  1. 94 Posts.

    Chemeq's often overlooked key fundamentals.

    Listed below are some key points about Chemeq's future potential which seem to me to be still somewhat overlooked. Having studied Chemeq as far back as the original prospectus (anyone who has read this 106 page document will know just how much the goal posts have moved since ) then these key points might help explain the enthusiasm long term shareholders have for this company, myself included.

    1/ Bell Potter Research (9-10-02) available on Chemeq's web site.

    "Chemeq should achieve high profit margins on its sales. At a selling price of $1 mill per tonne, the treatment cost for each pig is $2.50, which is lower than the existing price of a combined antibiotic and vaccination treatment.This compares favourably to estimated direct production costs of approximately $10,000 per tonne".

    "The higher growth rates demonstrated in trials indicate that farmers could be better off purchasing Chemeq’s antimicrobial at commercial rates than using antibiotics supplied free of charge"
    How many other growth companies with a market cap in excess of $400 mill stand to enjoy margins in the order of 90% with huge markets. Remember even when then they successfully manufacture 750 tonnes p/a, this will only represent 7.5% of the world mkt for pigs and chickens.

    2/ 20-06-02) INDEPENDENT TRIAL IN CHICKENS CONFIRMS ECONOMIC SUCCESS OF CHEMEQ'S ALTERNATIVE TO ANTIBIOTICS

    "After reducing the dose of the drug to 10% of earlier trials, results showed that chickens had the same level of health and grew faster on less feed, providing a competitively priced alternative to antibiotics for farmers," said Dr.Alistair Murdoch, Corporate Marketing (Animal Health Care), Chemeq Ltd
    "Our earlier trials showed that higher doses of the drug gave healthier chickens, and hence weight gains," said Dr Murdoch. "However in this recent trial, the small dose of CHEMEQ (RTM) polymeric antimicrobial gave at least two outstanding benefits.Firstly, exceptional weight gain of 17%,and secondly, 11% less feed consumption whilst achieving this increase of weight.These results are most economically significant for poultry farmers."

    I suspect that cost of feeding a chicken for 5-6 weeks represents probably up to 70% of the cost of production (ex the farm gate ), so a 11% saving in feed is very, very significant, plus of course we also have this huge beneficial weight gain of 17%.

    3/ Readers may not have noticed that CHEMYDE which is FDA registered, does not now even appear on Chemeq's web site these days. I suspect that margins are not as good as in animal health, plus the mkt is I suspect very fragmented, requiring a very large sales force. At the Hilton briefing by Dr Melrose last year, he was very enthusiastic about how attractive the animal health mkt was, in so much as only limited sales staff numbers were required, owing to the fact that pig and chicken production is very concentrated, with major players in each country ie with often 10% producing up to 80% of each countries entire production
    .
    14-08-01 CHEMYDE® preservative is 5 to 150 times more efficacious than either of the two market-leading preservatives against a range of germs," said Dr Melrose.
    "The US market in cosmetics is worth more than $300 million. As soon as we can get sufficient production capacity, we'll take advantage of this market. We expect to be producing export quantities in 12 to 18 months."

    Putting CHEMYDE on the backburner now, is a clear case of management prioritorising where success will come fastest. All of the research on Chemeq's web site is excellent, and will help to join many dots together, especially for long term shareholders.Every morning I wake up wondering what further good news will be released to the asx pre the open. In the last 12 months alone, there have been at least 18 major announcements, many which were market sensitive and lodged prior to the mkt opening.
    I deal thru a major broker who is still not covering Chemeq. This is also the case with my investor friends, who deal with major brokers. It therefore makes me wonder just when CMQ will be on the major brokers radar screen. Many of the clients of these majors will sometime in the future scratch their collective heads wondering why this company was overlooked for so long, thereby increasing there $ entry point. Perhaps inclusion of CMQ into the ASX 200 index will stir things along.

    PS, I first became aware of Chemeq when they were 83c thanks to a very isolated posting on hot-copper back in Oct 2001. For this poster, I am extremely gratefull. I dont often post on hot-copper, so I just hope somebody gains a little more detailed insight into this companies future potential.
 
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