Dug Technology Ltd (ASX: DUG) plays in a specialised niche of the technology market, providing software and compute as a service (CaaS) products to big players in the oil and gas sector.
Shaw and Partners recently ran the ruler over the company and believes they're deeply undervalued at the moment.
More on that later. Let's have a look at the most recent statements from the company.
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Strong profit uplift
Dug, in its first-half profit statement to the ASX released in late February, said its total revenue came in at US$40.4 million, up 40%, while normalised EBITDA was up 161% to US$13.6 million.
The company said regarding its results:
DUG achieved record financial results in FY26-H1, characterised by significant revenue growth and margin expansion. These results were underpinned by growth in the Services business and the ramp up of the EPIC contract in Malaysia. Services growth was driven by strong performance in both established and emerging regions, and the continued adoption of MP-FWI Imaging technology. DUG expanded its global multi-client portfolio by launching two new seismic reprocessing projects offshore Equatorial Guinea in partnership with Geoex MCG. Both projects are fully pre-funded by clients and cover extensive acreage in the highly prospective deep-water Douala and Rio Muni basins, ahead of upcoming exploration licensing rounds by the Ministry of Hydrocarbons and Mining Development.
Dug Managing Director Dr Matthew Lamont said the company entered the second half "with a high degree of confidence in our growth momentum''.
Shares looking cheap
Shaw and Partners said in a recent research note sent to its clients that Dug had sunk nearly $60 million into high-performance computing infrastructure over the past three years, which it could now leverage for outsized gains.
Shaw and Partners added:
New regions and a growing reputation support contract awards continuing to grow. Dug is favourably exposed to a rising oil price environment, has limited direct revenue exposure to the Middle East currently and has materially underperformed its oil and gas service peers … year to date, creating an opportunity for savvy investors.
Shaw said Dug has only recently expanded into the Middle East, with the region accounting for less than 8% of total revenue.
This was despite the Middle East and Latin America accounting for about 22% of global upstream capex in the sector.
Shaw said Dug was also demonstrating an ability to grow its "share of wallet" with existing customers.
Shaw and Partners has a price target of $3 on Dug shares compared with $2.01 currently.
Dug was valued at $273.7 million at the close of trade on Monday.
