Presumably he is trying to pre-empt ATC warning him of traffic in the circuit, but the phrase 'Visual one ahead' would probably be more correct.
The word 'contact' has caused some problems in the past due to ambiguous meaning. For example, does 'contact ground' mean communicate with the ground frequency, that you are in visual contact, ie you can SEE the ground, or are in physical contact, ie are ON the ground. Of course there is also a further aviation meaning relating to magnetos. This ambiguity has been implicated in accidents in the past. In particular, I can think of a Bulldog crash involving a foreign exchange pilot, for whom English was not his first language. He was already in some difficulty, and was asked something like ' Do you have contact with ground?' It didn't end well.
As a result, in UK civil R/T contact is only used in the communicate sense. To say it in the sense above may be understood but is technically incorrect. CAP413 refers:
In the UK
CONTACT shall have the
meaning
“Establish communications
with...(your details have been
passed)”.
Furthermore, 'contact' is never used by military pilots on R/T except under a very specific circumstance that does not relate to any of the examples above. Its incorrect use, particularly by light a/c pilots who are trying to sound punchy, grates badly!