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#Opus: Dark clouds on the horizon

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According to Swedish news agency Nyhetsbyrån Direkt, Opus‘ CEO Magnus Greko considers it as highly unlikely that the EU-directive which is being evaluated by Swedish traffic department “Transportstyrelsen” will lead to more seldom inspection intervals.

Opus’s share price was slaughtered yesterday, not only by the general insanity in the markets but also by reports by Swedish TV channel “SVT” about the ongoing evaluation.

Magnus Greko is today quoted saying that the television report is misleading. Transportstyrelsen does have the task to evaluate how Sweden should tackle the EU-directive, but the whole point of the directive is to create stricter inspection rules. There are no actual changes of the intervals in the directive, instead the same minimum levels as before are applied and Sweden has adapted to the this minimum level with its current interval structure, says Greko.

He continues by saying that the whole point with the directive is to create stricter rules for the cars’ more and more advanced electronic systems. The reason for Sweden’s tighter inspection intervals, compared to other EU countries, is the tougher climate, longer distances and older vehicle fleet, as well as a leading position in issues like traffic safety and environment.

This is a not an issue in our view. We see it as highly unlikely that Sweden, particularly with its Green party in power, would contribute to both a worsened traffic safety and increased emissions which would be the consequences of looser controls of exhaust systems” says Greko.

Swedish vehicle inspection represented roughly a third of Opus’s operational profit during H1 2015. Greko points out, however, that the directive is only aimed and personal vehicles. Opus is conducting around 2 million Swedish inspections every year, of which almost 50% are non-personal vehicles (e.g. trucks, taxis, motorbikes, mobile homes etc). While he could not comment on the share of operational profit related to non-personal vehicles, Greko is quoted saying that the inspection fee for trucks can amount to several thousand SEK.

CEO Greko sees a further safety net in the unlikely scenario of looser inspection intervals: some of the smaller players that focus on personal vehicles, 3 out of 6 inspection companies operational in Sweden are unprofitable today, could potential go belly up.

Asked how Opus is affected by a potential take-off by the market of self-driving vehicles, Greko is quoted saying: “Positive, the more advanced cars, the more control is needed. This is one of two mega trends we have identified, with the other one being an increased number of cars in emerging markets leading to increased need of inspection.”

Unfortunately, we believe that this issue will lay like a dark cloud over the Opus share, until an official solution is announced. If Sweden was to change its interval towards the EU-directive minimum level, this is obviously a clear negative for Opus.

Nordic Investor

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