The Orcoda Ltd (ASX: ODA) share price is one of the few shining lights on the market today. Despite the ASX in a sea of red, Orcado shares are up 40.91% at the time of writing on the back of a contract win.
Despite this rise, however, Orcoda shares are still very much at the smaller end of the ASX spectrum. With shares last changing hands at 15.5 cents, the company’s market capitalisation currently stands at around $18 million.
Orcoda is a logistics solution provider that specialises in business efficiency and optimisation of processes. The company focuses on three key business sectors: healthcare, transportation and resources.
Why is the Orcoda share price defying gravity?
Shortly after the market closed yesterday, Orcoda announced that its subsidiary, Resource Connect Logistics, has signed a nine-year contract with the Mt Buller Ski Resort in Victoria.
The contract comprises a five-year term plus two additional two-year options. Under the arrangement, Resource Connect Logistics will provide guest transit services and rideshare services to Mt Buller Ski Resort customers during the annual ski seasons.
With this, Orcoda will be tasked with ensuring all customers are efficiently moved around the mountain during its seven days a week, two shifts per day operations.
The contract is expected to generate around $2 million to $3 million revenue per annum. And if it runs the full 9-year term, contract revenue value is estimated to be between $20 million and $30 million.
To put these figures into perspective, Orcoda generated $2.4 million revenue in FY19.
The company stated it will be using the technology it has developed for its resource projects and healthcare projects to deliver the Mt Buller project, along with specifically developed platforms for the ski resort.
The company will also work closely with its key supplier Busfleet who supplies Orcoda will all of its buses and drivers.
Management commentary
Commenting on the contract win, Orcoda managing director Geoff Jamieson said:
“Orcoda was awarded this long term contract to provide transport services by the Mt Buller Resort because Orcoda management have a proven history of effectively managing high volume transport requirements, with long term customers, across multiple industries, whilst utilising best in class efficiency and optimization software.”
“COVID-19 restrictions may have an effect on our achievements this ski season but the nature of this agreement should provide long term benefits to the customers of Mt Buller Resort and Orcoda stakeholders,” he added.
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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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