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On a day when the FTSE 100 has slid more than 100 points, AIM-listed Petards Group (LSE:PEG) share price has soared by over 110%, rising 12.75 pence to 24.25, and there is no guessing or speculation as to why. Petards announce today that they have been awarded a £7 million contract by the Ministry of Defense. Under terms of the contract, Petards will “replace the RAF’s entire secure radio equipment which allows safe movement [of] personnel around airfields and communication between air traffic control and air field staff.”
The movement of Petards share price today is interesting, not only on a day when the movers and shakers are moving and quaking, but from the perspective that this does not seem to be a a knee-jerk reaction from investors, but a rational, studied response. And it may not be too late to get in on the action. Let me explain why.
A Bit of Background
Petards has been in business for more than 60 years, joining the London Exchange on 03 March 1997. It’s a small company, with only 17.75 shares in issue. At the beginning of November its market cap was £2.29 million. The share price increase today will take that market cap to over £4 million. It will also make shareholders of record quite happy.
Recent History
30 September 2013: Petards announces its half year results.
- Revenues declined by £1.1 million to £3.6 million.
- Operating loss of £299,000 against a £51,000 profit year-on-year.
- Pretax loss of £338,000 versus a £22,000 profit in the previous first half.
- Net debt increased during the period from £0.1 million to £1.0 million.
- Share price dropped by 1.0 pence, or roughly 8%, to 11.5 pence.
09 October 2013: Petards wins £1.7 million contract with Bombardier (TSX:BBD). Share price rose 1.0 pence, a gain of roughly 10%, to 11.00 pence.
24 October 2013:
- Petards wins CCTV contract with Alstoms (EU:ALO).
- Petards applies for issuance of 96,322 ordinary shares on the AIM.
- Share price increases by 1.0 pence, from 10.5 to 11.5, a 9.5% increase.
- Petard wins £1 million contract with Hyundai Rotem.
- Petard announces issuance of 58,828 new shares set for 14 November as part payment for the acquisition of the Walter Hall Group.
- Share price increases by 6.5% from 11.5 to 12.25.
13 November 2013: Contract announcement causes Petards’ share price to rebound to a level not seen since 12 December 2012.
Given the Readers Digest™ version of the first half losses and the recent contract wins, it appears that none of those contract – until today – were enough to put the oomph back into the company’s get-along. Since the responses prior to today’s were minimal and momentary, investors see the RAF contract, which runs through 2025 as an indication that Petards may be turning a corner as it strives to return to its former glory.
A final note of interest. 6.3 million Petard shares traded hands today. That’s 35% of the total currently in issue. Petards is at least worth watching, if not more.
