The rollercoaster ride for Provenco's share price looks to be over, with a new multi-million-dollar offshore contract helping to recover ground lost after last month's profit downgrade.
The three-year deal - worth more than $17 million - was struck between the electronic payment solutions company and a subsidiary of Malaysia's
national oil company, Petronas, for the supply and implementation of outdoor payment technology at petrol stations.
The market reacted positively to the news, with the share price closing up 6c yesterday at 88c.
Yesterday's 7.3 per cent jump continued a recovery which followed last month's dramatic sell-off when Provenco's share price fell from 90c to 74c.
The market jitters had been triggered by a profit downgrade from $9 million to between $7 million and $7.3 million for the year to June 30.
The company said at the time the downgrade was purely a timing issue and did not represent any loss of revenue in a business characterised by lumpy earnings.
ABN Amro Craigs research analyst Mark Lister said the latest deal was a good announcement and, although the profit downgrade had been disappointing, there were mitigating factors.
"My view was that it was overdone and that it didn't deserve to fall as much as it did and I guess those people that were in there buying it up at 74c are quite happy now that they've made an easy 20 per cent over a couple of weeks on their money."
The new Malaysian deal followed the implementation of EMV (Europay, Mastercard, Visa) compliant payment systems across 600 petrol stations since 2004.
Provenco chief executive David Ritchie said additional maintenance business would provide a consistent revenue stream.
"For as long as the systems are out there we maintain them ... that's a separate contract we have," Ritchie said.
"This is consistent with Provenco's global growth strategy of developing partnerships with customers in the true sense, where Provenco will supply, maintain and upgrade customers' technology where required."
Last week, Provenco signed its first European deal - a $3.5 million contract to design, develop and deliver electronic and outdoor payment systems to oil giant Shell's 200 Belgian petrol stations.
Lister said that although the European deal was smaller it could be strategically better "in the sense that it's the first foray into Europe with a big-name customer like Shell, which could potentially lead to some more opportunities over there for them".
