KEY POINTS:
Aristocrat Leisure
The extraordinary problems of casino machine manufacturer Aristocrat Leisure have started to be revealed in a class action court case in Australia.
The shareholder class action is being heard in the Federal Court dating back to an incident in 2001.
In December 2001, Aristocrat had a contract to sell 3000 poker machines to a Peruvian casino operator.
Aristocrat booked A$30 million ($36 million) in revenue and an estimated A$10 million in after-tax profit from the deal.
It now concedes this contravened accounting standards and profit forecasts for the region were unreasonable.
Six months after Aristocrat booked the revenue on the sale, two thirds of the machines were sitting on a dock in Lima and the firm had received only A$19,000 from the buyer.
Under new management, the share price has risen sharply since but the potential for damages emerging from the court case is putting some pressure on the shares.
Opus International Consultants
The former Ministry of Works, made a strong debut on to the stock exchange at 20 per cent above its listing price of $1.65.
OIC was priced to succeed where others have failed in a market that is much more wary of IPOs. OIC is a good-quality listing with very good medium-term growth prospects. But long-term growth is harder to assess. The business model of employing expensive consultants and charging them out by the hour lacks scalability. However, the quality of the company makes earnings more reliable, particularly as it picks up work in the infrastructure and transport sectors. The initial high premium could recede once the institutions have built up their positions and the share price might slip slightly from its current level. But that could be the time to buy into what is a good-quality company.
Projects Opus has worked on include the Britomart complex.
