Codan: Metal detectors making money

A lift in sales leads to profit upgrade for the metal-detector-to-communications company

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Codan Limited (ASX: CDA) today upped its net profit forecast for financial year 2012 from $20m to $26m. Sales of gold detectors have apparently gone bananas in Africa. Maybe the locals haven't seen the falls in the price of gold lately, or maybe they are hopeful of that once in a lifetime gold nugget find.

Actually, the real reason is that Codan has spent the last twelve months promoting its market leading detectors in other parts of Africa, and it's starting to show results. Coupled with efforts to ensure customers can more easily purchase 'genuine' products, sales demand has lifted. (Codan was previously having issues with fake metal detectors being sold as Codan's products.)

Radio Communications

Codan also runs a radio communications business, making high frequency and satellite communications equipment for global security, military and peace keeping sectors. The company advised that this business continues to expand its product offering and customer base, and will deliver a significant profit improvement this year. This segment reported a 41 per cent increase in revenues to $69.8m for the 2011 financial year and represented 41 per cent of the company's 2011 revenues.


The Minetec division also reported a strong first quarter under Codan's ownership, and remains on track to deliver the forecast $1m Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).  Codan acquired Minetec for $10m in January 2012. The company designs and manufactures a range of communications solutions for the mining sector, and looks like a good acquisition, with plenty of potential under Codan's guidance.

Foolish takeaway

The market liked the news with the share price up by 6 cents to $1.45. Currently trading on a forecast P/E of 9.2, and paying a dividend yield of around 7 per cent, Codan looks interesting, and worthy of some further research.

If you're looking for income from your shares, look no further than "Secure Your Future with 3 Rock-Solid Dividend Stocks". In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool contributor Mike King doesn't own shares in Codan. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool's disclosure policy.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »