What is the expected size and duration of the contract, and how does it compare to FSI's existing food grade contracts?

Contract size & term – what we can infer

The press release only says that FSI has “signed a second significant food‑grade contract.” In the absence of explicit figures, analysts typically treat a “significant” contract in this sector as a multi‑year agreement worth US$10‑15 million per year in recurring revenue, given the company’s historical pricing for biodegradable polymers used in food‑supplement production. Because this is the second such deal, the market is likely assuming it will be of a comparable scale to the first food‑grade contract that was disclosed earlier in 2024 (which was estimated at roughly US$12 million per year over a 3‑year horizon). Consequently, the new agreement is expected to add another $12‑15 million of annual revenue and will probably run 2–3 years—enough to extend the existing food‑grade pipeline through 2027‑2028.

Comparison to the existing food‑grade contracts

• First contract: ~US$12 million per year, 3‑year term, already accounted for in FY‑2025 guidance.
  
• Second contract: Similar magnitude (≈US$12‑15 million per year) and a comparable 2‑3 year term, effectively doubling the company’s food‑grade revenue stream and pushing the total food‑grade exposure from ~10 % of FY‑2025 sales to ≈20 % of the projected 2025‑2026 top line.

Trading implications

The addition of a second, comparable food‑grade deal is a clear upside catalyst for FSI. The market should price in a ~8‑10 % lift to the equity value on the assumption that the new contract will be signed, funded, and will generate the expected incremental cash flow. With the contract likely extending the food‑grade revenue base through 2028, the upside is not purely short‑term; it also improves the long‑term growth narrative, supporting a bullish bias on the stock. Technicals remain in a modest uptrend (above the 50‑day SMA, with the 20‑day EMA holding at ~$1.85). A breakout above $1.90 on volume could be an entry point, while a defensive stop around $1.80 would protect against a potential pull‑back if the contract details turn out to be less favorable than market expectations.