How do you arrive at the value of the contracts you expect to be...

How do you arrive at the value of the contracts you expect to be signed, eg Razor at $6mio per contract?
The two contracts that were in the 1st half results had a combined value of just $2.2mio.
That aside, when valuing a stock the market looks forward, rather than just the current situation. ITE may well get their remaining 5 contracts into the 2nd half, but they have given no firm indication of any further contracts beyond these contracts.
Given the lead time between project scoping, design and implementation I would suggest ITE will be battling to get any new contracts settled (sales revenue recognised) in the 1st half of 2007/2008. Meaning they may need to rely solely on contract service fees to offset their high cost base. If this was the case then they would most likely report a loss for the first half of 2007/2008.
As for a pe of 40, that is fanciful thinking and would only apply to a tech stock that could convince the market such a premium is justifiable (eg strong track record of growth and future growth prospects)
Given ITE's record, a pe of around 10 would seem appropriate.
For a comparison company look at ADA.
Both companies operate in a niche market with 1st class products - ADA has a pe of 8x.