Getech shares soar after contract win

Getech Group Plc., the small-cap oil services group is attracting much attention this morning after announcing its largest ever single new contract, sending its shares as much as 25% higher.

Getech, which specialises in geoscience, said it was awarded a contract by the Angolan National Oil Company, (Sonangol) worth $5 million.

Sonangol has responsibility for overseeing and managing the oil and gas exploration and production in Angola.

This new proprietary services contract will be undertaken by the company’s Commissions division, Getech said. Work is due to start immediately according to the company, which said it anticipates most of the income will be recognized in the current financial year.

Getech’s chief executive, Raymond Wolfson, indicated the deal signalled benefits Getech sought to achieve by aiming for exclusive expertise within its field: “This contract represents our largest proprietary project to date. Such contracts are only feasible because we have built a large team of geoscientists, many of whom are specialists in the particular disciplines required and who can integrate their disciplines into our Globe exploration platform.”

Today’s positive news for investors comes on top of the announcement in July that funding for a project to create a ‘multi-satellite’ survey network exceeded £1m. The global roll-out of a pilot study utilising the European Space Agency satellite system, CryoSat, was announced in July 2013. Getech aims to develop methodologies to improve the exploration value of satellite gravity data.

The CryoSat initiative looks set to extend the expertise of Getech’s capabilities further beyond the reach of its rivals and is an obvious plus.

Getech looks ‘classically neglected’

The Alternative Investment Market (AIM)-listed firm appears to be ‘classically neglected’—its strengths may have been overlooked due to obscurity.

This highly-specialised firm appears to have no debt and a prospective yield of 3.9%, whilst none of the companies in a carefully selected group of its peers pay a dividend.

Additionally, free cash flow per share is trending in the right direction at £2.28 in 2013 versus £2.06 in 2012 and £0.81 in 2011.

Price-to earnings ratio can get a tick too: as long as estimates for 2015 EPS at £6.47 are feasible. If so, prospective P/E at 8.8 suggests the stock is currently trading at a discount.

The shares themselves have good momentum on the buy side according to the chart and the price is comfortably above the 50-day and 100-day moving averages (MAs).

If the stock closes above the 200-day MA today (Monday 8th September) which it is currently challenging, the upside prospects would get an added boost, especially given the signal line of the Moving Average Convergence Divergence (MACD) has today crossed above the MACD itself.