Why the Service Stream share price jumped 9% higher today

The Service Stream Limited (ASX:SSM) share price is jumping higher on Thursday. Here's why it is up 9% this morning…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Service Stream Limited (ASX: SSM) share price has been a strong performer on Thursday.

At the time of writing the essential network services provider's shares are up 9% to $2.66.

a woman

Why is the Service Stream share price storming higher?

Investors have been buying Service Stream's shares after it revealed the award of a major new contract.

According to the release, a consortium that Service Stream is part of has won a ten-year contract with Sydney Water Corporation.

The consortium, which will now take the form of an unincorporated joint venture, comprises its Comdain Infrastructure business, engineering company John Holland, Lendlease Group (ASX: LLC), and WSP Australia.

What is the contract?

Sydney Water has appointed the consortium as the Regional Delivery Contractor for one of its three network regions under its new Partnering for Success contracting program.

Under this program, it will provide Sydney Water with a "TOTEX" asset management service covering the design, construction, maintenance, and facility management of all treatment and network assets in its Southern Region.

The contract commences with a six-month mobilisation period starting in January 2020. This will be followed by two five-year service delivery terms with a performance review at the end of the first five years.

Based on forecasts provided by Sydney Water, management estimates that the revenue from service delivery is expected to be in the order of $200 million per annum for the consortium.

As its Comdain Infrastructure business has a 30% share in the joint venture, this equates to annual revenue of $60 million for Service Stream.

Service Stream Managing Director, Leigh Mackender, believes the appointment "reflects the strong capability and prior track record that each of the senior joint venture partners has in delivering positive outcomes for Sydney Water and its customers over the years."

"The Board and I are delighted that the capability and performance of our recently acquired Comdain Infrastructure business has been recognised by Sydney Water with this significant contract award. We look forward to working with Sydney Water, in concert with our D4C colleagues, in building what we expect will be a mutually rewarding relationship for many years to come," he concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Service Stream Limited. 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.

More on Share Gainers

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a sour end to the trading week this Friday.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why 4DMedical, Clinuvel, Life360, and Silex shares are pushing higher today

These shares are having a good finish to the week. But why?

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Healthcare Shares

Up 2,075% in a year, why is the 4DMedical share price rocketing again on Friday?

Investors just sent 4DMedical shares surging another 20% on Friday. But why?

Read more »

A girl sits on her bed in her room while using laptop and listening to headphones.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing session for the markets this Thursday.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Share Gainers

Why Catapult, DroneShield, Infratil, and Qoria shares are charging higher today

These shares are having a good session on Thursday. But why?

Read more »

A group of happy young people watching sport on a laptop celebrate.
Share Gainers

Here are the top 10 ASX 200 shares today

It was an exceptional session for investors today.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why 4DMedical, Brazilian Rare Earths, Clarity, and Tuas shares are racing higher today

These shares are having a better day than most on hump day.

Read more »

Woman with an amazed expression has her hands and arms out with a laptop in front of her.
Share Gainers

Why BHP, EchoIQ, Life360, and Qantas shares are racing higher today

These shares are having a solid session on Tuesday. But why?

Read more »