Opus International

By Dan Stratful

Friday 7th October 2011

Opus International (NZX: OIC ) provides services to infrastructure and related markets and its range of services include infrastructure, architecture, construction, water, environment, asset development and management solutions. The company has operations in NZ, Australia, Canada and the UK and like Fletcher Building OIC looks particularly well placed to benefit from the re-building of Christchurch.

However OIC looks set to benefit from Christchurch rebuilding before Fletcher Building as OIC’s services are needed in both the redesign and the reconstruction stage eg: architecture, town planning, surveying and engineering.

For the financial year ended 31 December 2010 OIC’s net profit after tax was $22m, up 18% on the previous year, while operating profit rose 25%. Revenue however fell slightly to $367.2m, down by 0.2%, while net operating cash flow dropped 48% to $19.9m from a year earlier. Earnings before Interest and Tax (EBIT) lifted significantly to $31m, up 22% on the 2009 result. For the first six months of the current financial year (ie: the six months to 30 June 2011) OIC reported a net profit of $11.3m, up 8% on the previous corresponding period. Revenue was up $12m to $197m.

OIC’s first half result ending 30 June 2011 was solid enough as net surplus after tax of $11.3 million was reported, an uplift of $0.9 million on the first half of 2010. During the first half OIC was impacted by two major disasters - the Queensland floods and the Christchurch earthquakes. Trading conditions in the UK continued to be very difficult both in work levels available and the prices at which work can be won. A loss of $0.8m was recorded in the UK in the first half of the year reflecting the continued fragility of the UK economy. In Australia OIC experienced stable business conditions in much of the country and the New Zealand market strengthened over the period. In Canada OIC focused on bedding in the DaytonKnight acquisition and growth opportunities across the wider Canadian business.

Looking forward, OIC has some significant work secured or coming to market and its NZ operations should continue to see robust conditions, with some exciting growth potential in Australia and Canada. The UK operations remain a worry however the UK operations make up a small amount of over group operations with OIC’s main markets in NZ and Australia which are performing well. Canada provides growth.

Investment Research Group (IRG) views OIC shares as a GROWTH BUY and the shares look set to provide a mixture of growth and a growing dividend, as profits increase.

OIC shares today traded at $1.80.

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge by calling 0800 437 8489, 09 304 0232 or dan.stratful@irg.co.nz

Disclosure: OIC

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