Some good straws from Rick and Rocket6 on the CDA results. I thought I would just add some of my thoughts after listening to their conference call.

• The minelab market while significant to the buisness is probably not going to be growing much larger than it currently is over the next few years. I don't think it will shrink but will probably stay around the 230-300m revenue level depending on market access, gold proces and new model releases and uptakes etc.
• GPX 6000 not selling as well as hoped but they are implementing sales strategies to educate consumer on the benefits --> made primarily for the african market and it can detect lower grades so is a good unit but these benefits need to be sold to consumer to get the upgrade.
• Are now selling units into Southern Sudan, but Northern Sudan is still locked out. Indian expansion on track and going well.
• I thought it was a solid update on the minelab buisness and pretty much as expected.
• Guidance was for Minelab for a poor H1 FY23 (relatively) and expected revenue to be less than H1 FY22 (137m) but expect H2 to improve as new recreational units are released to market. I think the H1 numbers will depend on how well the GPX6000 sells over the next few months, next update in October.

• The communications segment is growing fast and will become a bigger component of the buisness over time. The Zetron and DTC aqcuisitions looks really good with both ahead of EBITA year 1 targets, achieving 15m and 19m (vs year 1 target of 8 and 14m).
• Good commentary around how these acquisitions and how they have been successfully integrated. I get the feeling that future growth will come from the communications segment and I like how these acquisitions enable them to move up the value chain and supply end to end tender solutions. Still plenty of work to realise potential but they have positioned themselves well fo rthe opportunity.
• Orderbook increased by 23-24% for both and now sits at 149m and have guided for strong growth in FY23.

I think the selloff is pretty understandable as the Minelab guidance wasn't great, but I think if your happy to look through that and back management, then I didn't see anything here that would spook me. I think it is fairly valued around the $9-10 mark based on current numbers. I am still happy to hold and collect the $0.15 dividend.

I think too much focus has been put onto the Sudan situation. It is a negative short term and no one wants to give up $40-50M of sales but I don't think it really matters that much to the broader multi-year investment thesis. Minelab now accounts for only 54% (vs 80 previously) of the total buisness, due to the expansion of the communications segment, with the Zeftron and DTC aquisitions. From the contract announcements and the commentary around these businesses it suggests that they are being assimilated very well and I like how they have added depth to CDC and enabled it to transistion away from a products business to an end to end communications solutions business. Commentary around this business segment seems very positive and I am expecting an underpromise over deliver scenario regarding the lack of specific full year guidance, even though they are tracking ahead of the initial forecasts.

No sales from Sudan occurred in H1FY22, but Minelab sales were $138M, with the recreation and countermine segments sales maintaining their record FY21 levels. Countermine doubled from PCP. Sales are definately trending in the right direction overtime and even if we take 50M of sales off the FY21 result and assume no growth in the other metal detector markets during H2 then sales should be around $267M for Minelab in FY22. H1 sales were $138M without Sudan. They did comment in the call (you can relisten from their website) that the 1st 6 weeks of this year were equivalent to H1 rates. They also managed to achieve a record $50.1M profit in H1 without Sudan.

One comment from the investor call that was interesting was that there new gold detector GPX6000 was specifically designed for the african market but they did say they were happy with the launch and seeing good sales of this unit at around 5-600/wk vs an exptation of around 1000 if Sudan was open.

Other markets are also being developed with Brazil and Mexico are growing well and India being expanded into, so I think over time the Sudan loss will be made up in time by these other markets and when/if Sudan settles down then the sales will flow again through that channel.

I have been buying slowly in small packets in real life since it dropped below $10 and I keep looking for a reason why I am wrong about this buisness and what will stop it from continuing to pump out solid results into the future. I can't find any company specific reason why it isn't a buy for me.

They plan to maintain a 50% dividend payout rate and their ROE has ranged between 20-30 over the last 5 years. It is currently on a PE of 12.7, I think 15-20 is more appropiate for this business over the longer term and that give us a price target of $8.25-11, this assumes no profit growth on FY21.