Daily ShareChat: Opus

By Jenny Ruth

Friday 23rd July 2010

The weakness in Opus International Consultants' share price presents an opportunity, says First NZ Capital analyst Kar Yue Yeo.

"Our expectation is for Opus' (and the industry's) staff utilisation rate to rise as more New Zealand infrastructure projects are implemented in the coming 12 months," Kar Yue says.

"The recent announcements of government tenders and plans for major transport projects (road and rail) confirm the momentum in the sector."

Kar Yue says based on the latest government policy statement, annual road construction and maintenance spending is set to rise by 45% from $2 billion in 2009 to in excess of $2.9 billion by 2019.

"As New Zealand's largest engineering and asset management consulting group with strong expertise in the transport sector, Opus is poised to benefit from this increase," he says.

Kar Yue is also expecting Opus' British and Australian operations will have returned to profit in calendar 2010.

When Opus reports its first-half results on August 5, he is expecting a $12.9 million net profit, up from $5.1 million in the first half of 2009, reflecting the elimination of trading losses in Britain and Australia which occurred in the first half of 2009. He is expecting a 3.3 cents a share dividend for the first-half compared with 2.6 cents in the previous first half.

Recommendation: Outperform.

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