The Codan Limited (ASX: CDA) share price is pushing higher on Wednesday following the release of a positive announcement.
In morning trade the electronics products company's shares are up over 2% to $11.07. This compares to a 1.9% decline by the S&P/ASX 200 Index (ASX: XJO).
This latest gain means the Codan share price is up an impressive 52% since the start of the year. $7.29
Why is the Codan share price pushing higher today?
Investors have been buying Codan shares this morning after it announced a major new contract win for its Codan Communications business.
The Codan Communications business designs and manufactures mission critical communications equipment for global military and public safety applications. These solutions allow users to save lives, enhance security, and support peacekeeping activities across the globe.
According to today's announcement, Codan Communications has won a contract with a large African government to supply tactical communications equipment.
Management advised that the contract has a value in the order of US$10 million and includes the supply of Sentry-HTM radios and accessories. It expects this order to be delivered in the second half of FY 2021.
It commented: "This is a significant contract for Codan, as it reinforces our strength in providing such equipment to the African market and enhances our strategy to successfully penetrate the security and military sector globally."
The government customer intends to deploy Sentry-HTM radios for national security purposes in military operations in a country-wide program. It notes that the contract is a one-off purchase, and there are no material conditions that are required to be satisfied prior to delivery.
Management also advised that the customer has an investment-grade credit rating with a stable outlook. Nevertheless, given the current economic environment, its longstanding policy of mitigating credit risk either through a letter of credit or appropriate credit insurance will be followed.
