The Zicom Group Limited (ASX: ZGL) share price has had an exceptional trading run today, closing 128% higher at 13 cents.

The Zicom share price blasted off the blocks this morning – even reaching a new 52-week high of 22 cents – off the back of a multi-million dollar deal announced yesterday.

Zicom Group is an integrated manufacturer of marine deck machinery, fluid regulating and metering stations, transit concrete mixers, foundation and geotechnical equipment and precision engineered and automation equipment. The company also provides production integration solutions and hydraulic system services. 

Why is the Zicom share price rocketing? 

Yesterday, Zicom announced a $60 million deal to design and supply LNG propulsion systems for several oil product tankers being built for a leading European oil tanker owner. The orders have been scheduled for delivery in 2022/2023.

The company cited this deal as a testament of its momentum to transform Zicom's marine sector. Zicom advised that it has been developing technology for green energy propulsion systems for ocean-going vessels over the past 3 years.

The company believes that this strategy now enables Zicom to expand into the entire shipping industry rather than only focussing on offshore marine applications.

Zicom also noted that demand in the offshore marine sector appears to be showing some positive signs.

New shipping regulations position Zicom for growth

The International Maritime Organisation (IMO), which is part of the United Nations, regulates international shipping.

According to Zicom's announcement, the IMO 2020 rules mandate ocean-going vessels to reduce sulphur emission from engines to 3.5%, down from 4.5%.

Meeting this mandate will require that vessels install scrubber filtration systems or use a low sulphur fuel in place of diesel. 

Each of these options will require technological updates which Zimcom believes the company can support. It therefore views the implementation of the new IMO 2020 rules as a strong growth opportunity.

Today's gains see the Zimcom share price recover from its trading lows over the previous 12-month period. Its shares fell from 12 cents last February to a low of 4 cents in the coronavirus market meltdown of March.

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The Zicom Group Limited (ASX: ZGL) share price has rocketed 66.7% higher today on news the equipment manufacturer has entered the surgical mask game. Zicom Group announced that it will leverage its in-house engineering and manufacturing experience to design and build its own production line to manufacture masks.

What does Zicom Group do?

Zicom is a manufacturer of marine deck machinery, hydraulic system services, concrete mixers, foundation and geotechnical equipment, and fluid metering stations. With most of its customers in the capital goods business, many have held back buying decisions due to current uncertainty, adversely impacting Zicom's revenues. There has been a slump in the offshore marine sector and the precision engineering and technologies sector has not been spared the impact of the trade war. 

Why the pivot into face masks? 

Zicom Group says the move into face masks is part of its corporate social responsibility obligations, given global shortages. The company can leverage internal experience manufacturing medical technology as well as the short term availability of manpower due to COVID-19 lockdown measures. Having built its own production line, the company has entered production within 3 months of conception. 

Initial capacity allows Zicon to produce 3 million surgical masks a month. The masks have been approved by regulatory authorities in Australia and Singapore, with European regulatory approval expected in the next few weeks. US approval is expected within the next 3–4 months. The focus is on producing high quality surgical masks to provide protection to healthcare personnel and the general public. Zicom says this distinguishes its product from ordinary face masks being sold widely. 

What's next for Zicom? 

Zicom says growing demand for high quality surgical masks has convinced it of the long-term commercial feasibility of its latest project. Soft launch has just been initiated, and has apparently shown an encouraging pick up in sales.

Zicom has decided to develop and potentially expand this new business and is confident it will generate recurrent revenue to supplement the capital goods business. This will no doubt serve as a relief to investors after first half revenues fell 40%, leading to a $4.2 million loss for the period. 

The Zicom share price soared by almost 67% today, to close trade at 7.5 cents per share. 

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