Quantum eMotion Corp. engages in the development of cryptographic solutions based on quantum random number generators in Canada. It develops and markets encrypted data and communication solutions for financial, military, mobile, and internet telecommunication sectors. The company was formerly known as Quantum Numbers Corp. and changed its name to Quantum eMotion Inc. in June 2021. Quantum eMotion Corp. was incorporated in 2007 and is headquartered in Montreal, Canada.

Canada

Quantum eMotion Corp.

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

QNC.V reported revenue of CAD 0mn in the last 12 months, down 0% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS grew 9% from FY23 to CAD -0.02.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 406ppts and its growth decelerated by 15ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is favourable. This generally signifies that a stock is fairly valued or marginally undervalued abd is becoming more 'expensive', suggesting a short-term spike in confidence by the market at large.

Quantum eMotion Corp. reported a return on equity (RoE) of -128.9% in the last 12 months, down from -88.0% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -107.5% in the last 12 months, a decrease from -78.6% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to -125.2%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -29.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

QNC.V has very poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, inadequate interest coverage, and poor cash flow generation. We note an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, QNC.V is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, QNC.V is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. 

Quantum eMotion Corp.

CA$ 0.54

2

Quantum eMotion Corp.

CA$ 0.54

2

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 0.54

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