KEY POINTS:
QAN
Qantas (QAN) shares have fallen sharply since a bid for its control failed.
This week the company also said a three-month delay of the 787 Dreamliner announced by Boeing would now see Jetstar not take delivery of its first B787 before May 2009.
Qantas chief executive Geoff Dixon said that while the delay would affect Jetstar's international expansion in the short term, there would be no effect on the Qantas' overall growth strategy and no impact on Qantas earnings. Qantas' commitment to the B787 extends to 115 aircraft, with 65 firm orders, 20 options and 30 purchase rights. Qantas is subject to the difficulties faced by all airlines where operating costs are rising at the same time as competition eats into air fares.
Qantas is reducing costs aggressively and recovering some costs in fuel surcharges. Qantas is an investment that is better suited to the risk-tolerant investor.
OIC
Opus (OIC) shares are approaching their fair value, falling from the unacceptable premium they rose to soon after the IPO. This is a good company but any company based on consultancy work is limited by a business model where they sell hours rather than products. Nevertheless, there is a growth story in Opus in that it is in a growing market and is regarded as a high quality provider of engineering services. Opus has its origins in the Ministry of Works and Development which was established in 1885, and in 1988 it became Works Consultancy Services. In October 2007, it listed on the NZX raising $47.8 million through the issue of 28.9 million shares at $1.65 each. The company is the largest professional infrastructure consultancy in NZ and has 2145 staff across 71 offices and 11 laboratories in NZ, Australia, Canada and the UK.
