There is one S&P/ASX 300 Index (ASX: XKO) share that is outperforming the rest by miles on Tuesday.
A positive update from Codan Limited (ASX: CDA) has put the company front and centre on an otherwise lukewarm day for the market.
As we head towards midday, shares in the metal detection and communications company are fetching $5.28, increasing 19.5% from their prior closing price. Codan shares have sprung into action today as investors interpret the company's trading update for the first half of FY23.
Let's take a look at what is putting a rocket under this ASX 300 share.
No nasty surprises for this ASX share
The tail-end of 2022 was unkind to Codan shareholders as the company guided for a weaker outlook. In turn, the share price skidded nearly 54% lower on fears of a disastrous year ahead.
As mentioned in my piece yesterday, Codan was ready for a 45% fall in metal detector sales — a division that accounted for 52% of its total sales in FY22. As you'd expect, that would do some meaningful damage to future sales and earnings.
Hence, management guided for revenue between $198 million and $215 million in the first half of FY23. Likewise, Codan initially anticipated first-half net profit after tax (NPAT) to sit between $25 million and $30 million.
In today's update, shareholders were relieved to be informed that unaudited revenue in the first half was $212 million — hitting the upper end of guidance. Adding to the excitement, NPAT is now expected to be $31 million, eclipsing the original top-end estimate from this ASX share.
A slight disappointment was that Codan's Minelab (metal detectors) sales marginally missed its forecast of $75 million to $80 million. Instead, the higher margin division secured unaudited sales of $74 million during the period.
Meanwhile, the company's communications segment slightly beat expectations with $137 million in revenue.
Overall, the financial figures didn't exactly hit it out of the park. However, expectations were clearly low prior to this update. The fact that Codan has maintained a manageable net debt and hit its prior guidance is mostly reassuring.
What's next for the Codan share price?
Aside from any surprise updates, the next meaningful event for the Codan share price will likely be the release of its complete first-half results on 16 February. It will be at this point in time that shareholders gain additional insight into what the second half of FY23 could look like.
Despite the monumental move in this ASX 300 share today, Codan remains 37% lower than where it was a year ago.
