Codan (ASX:CDA) share price rockets 16% on trading update

The company’s shares are on the move during Tuesday trade.

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Key Points

  • Codan shares accelerate on back of a positive trading update
  • Sales surge despite tough trading conditions
  • Record net profit after tax expected for H1 FY22

The Codan Limited (ASX: CDA) share price is zooming into positive territory during morning trade. This comes after the company announced a trading update for the first-half of FY22.

At the time of writing, the metal detector-focused technology company’s shares are fetching for $9.75, up 16.49%.

Codan on track for ‘record profit’

Investors are buying up Codan shares after the company advised of a robust performance for the half-year ended on 31 December.

The company highlighted that it finished the 6-month period on a high note, with sales coming in at $257 million. This represents a 32% improvement when compared against the prior corresponding period.

Supporting growth, recently acquired businesses, DTC and Zetron, both exceeded first-half profit expectations by management.

Zetron manufactures mission-critical communication technologies. Products include voice dispatch, emergency call taking including next generation 911 (NG911), mapping, computer aided dispatch and fire station alerting.

On the other hand, DTC provides short-range high bandwidth communications suitable for the wireless transmission of video and other data applications. Customers include Military and Special Forces, Intelligence Agencies, Border Control and First Responders.

As a result of the strong trading performance, net profit after tax (NPAT) is forecasted to be around $50 million. If achieved, this will reflect a 21% increase on H1 FY21.

Codan stated that despite the global shortages of electronic components and supply chain disruptions, it has successfully maintained operations.

In addition, the group has increased inventory levels which will most likely act as a precautionary measure.

The company plans to release the first-half FY22 performance and outlook for the second-half FY22 on 17 February.

About the Codan share price

Codan designs and manufactures a range of electronic products and software for governments, businesses, aid & humanitarians, as well as customer markets. The company’s three main products are radio communication, metal detection, and tracking solutions.

Despite today’s eutrophic rise, it has been a disappointing 12 months for Codan investors, with the company’s shares falling 22%.

Based on today’s price, Codan presides a market capitalisation of roughly $1.76 billion, with approximately 180.88 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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