Up 169% in 8 months, have you missed your chance with this tech rocket?

Credit: Szaaman

Most investors would be pretty chuffed with a 169% increase in eight months, however it comes as little consolation for long-time (and long-suffering) shareholders of Codan Limited (ASX: CDA).

The share price is still below the level of three years ago and a very long way away from its peak, but the company has been one of this year’s best performers. The latest share price spurt comes after Codan released its (impressively solid) full year results in late August and also won a new contract with the Australian Defence Force.

Situation Unchanged?

I wrote about Codan last back in February after the impressive half-year results were released. Here’s what I said back then:

Indeed, the results have led to some commentators expressing an audible ‘sigh’, however for me there is some excitement from the result.

To start with, Codan’s greatest success, and the reason why the shares hit $4 back in 2013, was because of the company’s metal detection products. Sadly things went pear-shaped from there, when Chinese counterfeiters found that Codan’s products could be replicated as easily as a hoverboard or Razer scooter and revenue fell off a cliff, taking all profits with it. So the best news for long-suffering investors is that the company’s new metal detection products must be hitting the mark and analysts took an upbeat view to the prospects of the full year.

Well, Codan appears to have fulfilled my dreams and delivered on promise for the full year. Here are the highlights:

  • Underlying net profit after tax of $21.2m, up 67% on 18% higher sales
  • Statutory net profit of $15.5m, up 24%
  • Annual dividend of 6 cents, up 71%
  • Underlying earnings per share of 11.9 cents, up 68%
  • Net debt reduced
  • Best radio communications segment result in 7 years
  • New gold detector released to market pushed segment contribution to 59% of revenue, from 51%

Where to from here?

Codan’s board has forecast a stronger first half than the corresponding period last year, which is great news, and the half will surely be boosted by the $6.7 million contract awarded to it by the Department of Defence to develop a new Handheld Device Detector (HDD).

Codan is sitting on a trailing price to earnings ratio of just 11.7 and a dividend yield of 4.3% fully franked, making the company cheaper than the wider market and with much better growth prospects.

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Motley Fool contributor Andrew Mudie owns shares of Codan Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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