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August 2019: $4.77 was my 12-month PT, based on increasing gold detector sales, based on an increasing gold price, based on Trump primarily. . . . . .

24-Feb-2020: CDA Blew through my $4.77 PT quite quickly and went all the way to $8.49 (this past Friday). They're just under that now. I think $7 is a reasonable PT for them now. They're over that, but they have warned that the 2nd half will probably be softer because they probably won't be able to land another two large communications contracts like they did in the first half of FY20.

Their gold detector sales (their Minelab business) will keep kicking goals, but the extra detector sales may not be enough to compensate for lower earnings from their communications division, which can be quite lumpy depending on contract timing and the sizes of various contracts. All in all, I'm happy to keep holding Codan shares, but I've been trimming them, and I wouldn't be buying Codan up here.

23-Apr-2020: Lowering my 12-month PT for CDA to $6. Higher gold prices are a tailwind, but COVID-19-related restrictions are a definite headwind in the short to medium term. There's probably scope to increase that PT again later, and I still hold Codan, which were bought at much lower levels, but I think it's prudent to alter my PT and say that they look reasonably fully valued again here considering the current operating environment.

Good company. Good Culture. Good Products. Good Management. Most of that's already in the share price however.

01-Sep-2020: Codan is a company that just keeps on exceeding my own expectations, so I'm very glad that I hold them, and that I've held them for years Their FY20 report was another cracker. They beat all of their own previous records. They increased their final dividend by +47% (from 7.5c to 11 cps - fully franked of course). They make the best (Minelab) gold detectors in the world. Their communications division is also firing on all cylinders. They are Adelaide based (which makes two of us). And they keep creating excellent products which appeal to a global population that want to own and use the best available gear. I only have ONE regret with Codan, which is that I NEVER, EVER added them to my Strawman.com Scorecard...

02-Mar-2021: UPDATE: Increasing my PT (price target) to $17.20 now. Codan had a brilliant report on Feb 18th, after announcing a good acquisition two days earlier which strengthens their communication division significantly. They are acquiring US-based Domo Tactical Communications (DTC), from a Private Equity company. DTC is an established technology provider for high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks (next generation software defined networks where multiple antennas stream data to and from devices across a network that is self-forming and self-healing). DTC is a trusted and long term supplier into more than 20 key United States government agencies as well as the “Five Eyes” intelligence communities. DTC’s MIMO Mesh products provide wireless transmission of video and other data applications to predominantly first world customers, including Military and Special Forces, Intelligence Agencies, Border Control, First Responders and Broadcasters. DTC is headquartered in the US, with locations in the UK and Denmark and has around 40 employees. The acquisition comprises an upfront payment of US$88m (approx. A$114m), with the possibility of an additional payment of up to USD 16 million if certain earn-out targets are achieved in calendar year 2021. The acquisition is on a cash free, debt free basis and is expected to complete by 30 April 2021, subject to a number of US and UK regulatory conditions typical for transactions of this nature. In the first full year of Codan’s ownership, DTC is expected to contribute approximately A$90m of sales, A$14m in EBITDA and A$9m of profit before tax (PBT). It will be earnings-per-share accretive from day 1. As a result of the transaction, Codan will acquire total assets approximately equal to the purchase price with no change to Codan’s shareholder equity. The acquisition will be fully funded from existing cash reserves. All good. Onwards and Upwards!

UPDATE - 31-Aug-2021: Codan have spent most of the past 5 months trading at or above my last (most recent) $17.20 price target, which I set back on 02-Mar-21 when Codan was trading at $14.93. They shot through my $17.20 PT in the first week of April, so 1 month later, then seemed to use it as some sort of support line for about 4 months before falling away in the 2nd half of August, since they reported on August 19th actually. I'm still holding Codan shares in RL. They've been one of my best performing investments over the past 3 years and 1 month. My average buy price was $2.88 (in July 2018). Codan have been sold down on their latest result, based on two factors. I believe the first one is the main one, which is that Donald McGurk, their CEO & MD has informed the board of his intention to retire within 9 to 12 months after a suitable replacement has been found. Mr McGurk is the main driver behind the very positive collaborative company culture that enhances their growing competitive advantage in metal detection - they own and manufacture Minelab metal detectors (who make the best gold detectors on the planet). They also have a communications business that provides around one quarter of their annual revenue. Donald is also a fine manager in many other respects, including with sensible capital allocation, and more specifically making good targeted strategic acquisitions and not overpaying. He will be missed, but Codan is more than just their CEO/MD. The second reason is that they have warned that due to recent developments in Afghanistan, they are aware that planned sales into Afghanistan of communication equipment will likely now not go ahead. For context, around 2% of their total FY21 revenue came from sales into Afghanistan, but that was around 9% of their communications division sales. I don't consider this to be particularly material seeing as Comms is not their main money earner - Metal Detection equipment is - and Codan have demonstrated in prior years that they can develop new products and sell into new markets. If Afghanistan is closed to them, they will concentrate their sales efforts elsewhere. It's not a thesis-breaker in my view. Another thing to keep in mind is that Codan thrive when the gold price is high, so it's something to keep in mind. The higher the gold price goes, the better they will do in terms of gold detector sales, which is their main revenue-driver. I hold Codan, and it helps that I'm also a gold bull. Codan has proved to be a great pick-and-shovel play on the gold industry, and on the gold price rising, or staying up at elevated levels as it has. I wouldn't be buying up here, they still look expensive, but I think they'll get even more expensive when gold goes for another run, and I'm therefore setting a new 2 year price target of $19.70 for Codan. So that's a PT of $19.70, by September 2023.

25-Jan-2022: Update: No change to price target. $19.70 by September 2023. However, when I typed that bit directly above about not buying them "up here", the SP was still over $15/share. They're now back under $10/share and I have been buying more Codan sub-$10. However, after today's positive Trading Update they might be back over $10 soon, if not by the close of trade today.

Noddy summed up my thoughts perfectly in his "Trading Update" straw this morning.

Ex-MD Donald McGurk above. New MD Alf Ianniello, below, pictured in his previous role as boss of Packaging firm Detmold Group. Codan and Detmold are both very successful Adelaide based companies.

Disclosure: I still hold Codan, and have been adding to my position sub-$10/share, and I have also recently added them (finally) to my Strawman.com portfolio.

18-Sep-2022: Update: I do hold this one. And I'm very bullish on them from here. They look very oversold, but I admit it could take time for the market to start getting interested in them again. The gold price hitting a new two year low earlier this week hasn't helped their cause either. They have indicated that they expect the bulk of their growth to come from their Communications (Comms) Division during the next year or two, and that makes sense, and they still make the best gold detectors in the world, and I can't see anyone taking that title off them any time soon, so when the gold price does go up again, by enough, their Metal Detection division will resume its growth also. I won't write much on them now, as I've written plenty about them previously, and there's not to much to add to that.

For now, I'm being realistic and taking my target price for Codan down to just under $10. In 5 to 10 years they could easily be trading at $20/share, perhaps sooner, but that could realistically take 5 to 10 years, so my current 2 year price target for CDA is now $9.70, so by mid-September 2024.

26-March-2023: Update: Yeah, this one has been marked as stale, so I'm refreshing it. No change to my $9.70 PT for CDA. There was nothing worrying in their H1 report for FY2023. In fact, it reassured me that the thesis was still on track. Quality company. Quality products. Good Management. Good capital allocators, especially when it comes to M&A - they tend to pay a fair price for strategic assets that add to their business and make it better. Which is what you want.

Their Metal Detection (Minelab) business has taken a back seat to their Comms business this year, which is good - to see the Communications division perform so well, however Minelab is far more than just gold detector sales into Africa. Minelab will grow sales as well in future years. A rising gold price won't do them any harm either!

10th October 2023: Update: Yeah, still good! Comms Division is flying! Metal Detection division (Minelab) will experience growth again soon enough, with or without Africa, Afghanistan, Russia, etc, etc. Happy to maintain a $9.70/share price target for now - they're getting up there:

The Codan share price (SP) has doubled in the past 11 months from just over $4/share to close at $8.18/share today. I believe the recovery will continue.

27-Apr-2024: Update: Yeah, the recovery DID continue; here we are with an SP up around $11/share now. I've raised my TP to $10.75, which is higher than my old one but below the current share price, because I think Codan may possibly have overshot to the high side again now. They tend to trend well, both up and down, and they get oversold, and occasionally overbought as well, which is where they are now I reckon.

Their most recent half year report (H1 of FY24) showed that Comms is still firing and Minelab (Metal Detection) is coming back too, without too much assistance from Africa, so - as I have been saying all along - I thought that the problems in West Africa - and Africa is general - were not a company killer, or even that serious for their Minelab division in the long term.

There will always be headwinds in various parts of the world for a company like this, but when you make the best gold detectors in the world and some of the best communication equipment (encoded radio and wireless video transmission equipment being just two examples) in the world, these sort of setbacks or obstacles will only ever be temporary in terms of the overall growth trajectory.

Above all, even with the change of CEO/MD, Codan still have very good management who are disciplined and make sensible and strategic capital allocation decisions. They also don't sit on their hands or rest on their laurels; they are always innovating and developing new and improved tech and releasing new models across both of their two divisions (Comms and Metal Detection).

I wouldn't be buying more Codan up here at over $10.50/share; in fact I have been taking some profits, but Codan remains one of the largest positions across my real money portfolios, and they are currently my fourth largest position here on SM, behind LYL, DVP and GNG and just ahead of my two favourites goldies, NST and GMD, but I do have a sell order in to trim the CDA position a bit more, so that may move them down a few positions.

My MO is to ride these high quality stocks up from oversold to overbought and then to take some profits and rotate that into some other companies that are oversold in my opinion. But I like to keep a core position as a general rule, not sell out completely, just tinker around the edges.

This is particularly necessary here on SM, because we have a fixed pool of capital that we can't add to except by capital gains and dividends or distributions, so it's always a good idea to rotate money out of stocks that have run hard and slowed down into stocks that have the potential to do the same with the right conditions.

However it's important to not keep moving down the quality curve in search of value, because it's the higher quality companies that tend to run the hardest from being oversold, in my experience, once they do start to run, because people remember the good old days; past investors are often eager to jump back onboard a ride they associate with happy past memories when it starts heading in the right direction again.

And also, sometimes, just when you thought a company was fully priced or better, they find another way to grow. NCK is a recent example.

22-August-2024: Update: Yeah, they keep growing all right!! No longer holding this one in real-money portfolios, and reduced my exposure here yesterday thinking that there was perhaps too much optimism priced in up near $13/share. Well, they've been up over $14.50 today on the back of these results and they're still trading at over $14 now (at about 2pm Sydney time) so the market has not only realised that Codan's metal detection issues are now behind them, the market is also now re-pricing Codan as a growth stock again, which means they don't look cheap.

They didn't look cheap yesterday, and they certainly don't look cheap today, but you can do worse than back a quality management team like this one.

I believe they can now go higher from here now, because the market is no longer concerned about any aspect of this company. I'm still not buying here, but I am holding CDA in my Strawman.com portfolio. It's one to buy on a pullback, if we get one, but we're certainly not getting one today!

Codan FY2024 Results Announcement

Results Presentation

Because of their higher share price, the increased dividend (12 cps final div compared to 9.5 cps pcp) still puts them on a very low dividend yield - of around 1.6% (22.5 cps p.a. divs when you add the 10.5 cps interim to the 12 cps final div declared today vs an SP of $14.14 right now) but you don't buy Codan for income - you buy them for growth. That's what the market's telling us today.

17-Nov-2024: Update:

Reviewed, and Codan has been sitting above my old $14.77 price target and are trading sideways, or within a narrow range anyway, around or just below $16/share.

It seems the hype has has come out again and they're just trading as a quality company rather than a quality company that is growing at a rapid rate.

They're back on track now, and the market is no longer worried about them losing sales, such as they were in 2021 and 2022 in Sudan and other parts of West Africa, Russia and Afghanistan. It was a converging storm of issues across those countries a couple of years ago that caused them to confirm they would not be making Minelab sales there in the foreseeable future, and in the case of Afghanistan it was CDA's Comms equipment sales (secure remote communications solutions) that would cease there after the Taliban took back control of the country as the USA pulled out.

I said at the time they would find other ways to grow, and other places to grow sales into, and they did. They expanded their Comms division to the point where it became their largest revenue earner, and they kept innovating with Minelab so they have remained best-in-breed for gold detectors and mine detectors.

Anyway, that's old news. Since my last update here - after their FY24 results in August, they announced that they were being added into the ASX200 index from September 26th (2024) - Virgin-Money-UK-PLC-to-be-removed-from-the-SPASX-200-Index-and-Codan-to-be-Added.PDF and then in late September they announced another good strategic acquisition, of Kägwerks, a global leader in tactical operator-worn networking communications technologies that enable connectivity and integrated secure networking in a military environment. Another good add-on for their Comms division. I posted a straw here about that at the time of the acquisition. Here's the Acquisition-Announcement.PDF.

They then held their 2024 AGM on October 23rd - here's their Chairman's Address and CEO's Address from that AGM.

No causes for concern, however they look reasonably fully priced up here to me - I don't think they're worth more than $16/share until we get more positive news. They remain exposed to geopolitical risks in their markets around the world - but hopefully if we do get some global issues in one or more of their markets punters now won't overreact to the same extent as they did in that July '21 through December '22 period where the CDA SP dropped -80% from $19.33 down to $3.80/share.

Sure they were a little overbought at over $19/share in June 2021, but they were also VERY oversold at below $4/share in December 2022. I was buying at around $10 all the way down to below $4.

Up around $16/share is probably a fair price, so while I'm still holding some here, I lightened on the way up, and I sold out of Codan completely in June this year in my real money portfolios, at about $4/share below where they are now, so clearly I exited too early. I thought I'd found something better to invest in but I would have been better off leaving my money in Codan, with the benefit of hindsight, through until they hit $16 in late September anyway.

From here they'll probably move with the market absent any company-specific news, until we get their results FY25 H1 results in February. However if we get a guidance upgrade or downgrade from them between now and then and/or another acquisition announcement, that would certainly change things. But without that it's probably more sideways than up until Feb.

Disclosure: As at 17-Nov-2024, I'm still holding CDA here, but not currently in any real money portfolios.

Sunday 15th June 2025: Update:

I'm not holding this company at this point in time, other than a small legacy position here on SM - not holding in any real money portfolios.

Codan remains a Quality Company with Quality Management.

However, they are also not cheap up here:

So I would be buying Codan on a good pullback, like below $12/share, but I'm not paying over $16/share.

And they're up at over $19 now.

This is one of those "Quality always rises back to the top - like cream - when everything stops getting shaken up by volatility and negative sentiment" companies. And they've risen back up now, so not a "buy" for mine up here.

Of course, they can grow into their current valuation, and then be worth more, which is what some investors are clearly betting on, but I am seeing better opportunities elsewhere right now, just from a pricing perspective. Nothing wrong with this company, just too expensive for mine.