Codan (ASX: CDA) might not be a household name, but the South Australian-based technology company has quietly become one of the most impressive performers amongst the ASX 300.
The business designs and manufactures high-frequency (HF) radios, land mobile radios (LMR), and metal detection systems used across military, mining, and emergency response sectors. It also provides command-and-control software, secure communications infrastructure, and tactical mesh networks — all highly relevant in today's security-conscious world.
And investors have taken notice.
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A share price on the move
Codan shares have soared more than 64% over the past 12 months and are up an eye-catching 173% over the last two years. At the time of writing, the ASX tech stock is nearing all-time highs, with it's share price trading at $20.61.
Adding to its appeal, Codan offers a fully franked dividend, yielding 1.2% to provide some income to go with those hefty capital gains. While the yield isn't in the high single digits, the dividend has been growing, which bodes well for long-term holders seeking both income and growth.
What's driving growth?
Much of Codan's recent momentum stems from its communications business, which includes subsidiaries Domo Tactical Communications and Zetron. These units deliver mission-critical solutions for military and public safety customers, and their contribution is growing.
In the first half of FY25, Codan reported revenue of $305.6 million — a 15% year-on-year increase. Operating profit (EBIT) rose 21% to $65.8 million, and net profit after tax (NPAT) also jumped 21% to $46.1 million. Those are strong results, particularly in a sector where growth can be lumpy.
In addition, Codan is well-positioned to benefit from structural tailwinds such as:
- Increased global defence spending
- The US Next-Gen 911 mandate, which is expected to fuel demand for Codan's emergency response software.
- Strong performance from Minelab, its metal detection business, which continues to benefit from hobbyist and commercial demand alike.
Analyst forecasts are broadly positive, with revenue and earnings tipped to grow in the double digits over the next few years.
One thing to watch
Despite its stellar operational performance, Codan's valuation has become a talking point.
Some brokers believe the stock is trading around fair value or even slightly ahead of itself. The current price-to-earnings (P/E) ratio sits above 41, which is historically high and could limit further short-term upside.
Codan has earned its place among the ASX's most exciting tech stories. With a growing global footprint, exposure to critical defence and safety infrastructure, and a profitable business model, it's easy to see why investors are optimistic.
That said, the bar is high — and expectations are priced in.
For long-term investors seeking exposure to defence technology and communications innovation, Codan remains a name worth watching.
