Services company Ventia Services Group Limited (ASX: VNT) should outperform, Macquarie says, after the company won at least $2.7 billion worth of defence contracts this week.
Ventia was awarded two base transformation tenders packages by the Department of Defence, valued at about $2.7 billion over the initial six-year term.
The contracts also had two extension options of between one and three years, taking the total potential contract term to 10 years.
Macquarie said the total value of the contracts awarded to Ventia had increased, partly due to annual price escalations, "however we think also representative of higher violumes and underlying spend''.
Macquarie has a price target of $5.55 on Ventia shares, compared with the price of $5.09 on Friday, up 1.3%.
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Yet another contract win
Ventia also announced on Friday that it had secured a contract extension with the City of Sydney, worth about $100 million over two years.
That contract, which starts in January next year, will involve the company continuing to provide integrated facilities management services across 251 city-owned assets, including the Sydney Town Hall and Customs House.
"The scope of services includes hard and soft facilities management, project works, cleaning, maintenance, and strategic asset management,'' Ventia said in a statement to the ASX.
