Thoughts on Codan (CDA) please

Hi Ron – Merry Christmas, I hope 2022 has been a great one for you and that 2023 will top it!

You make some good points, with their ability to reinvent themselves the key one at the moment. I think the issue right now is the market mistrusting the turnaround that they have underway following their AGM and associated trading update where they lowered guidance for 1H23 earnings by ~$25-30m, which is significant relative to their profit of $100m last year. It also casts a shadow over earnings visibility i.e. if the company is so far off in terms of forecasting earnings, what hope does the market have! Throw in the fact they sell metal detectors  into the African market, which is a fairly volatile and unpredictable geography, and it makes sense to apply a decent risk premium. Earnings in FY23 will be around ~40% down on FY22 but they are expected to bounce back in Fy24, however I think the market will need evidence this is playing out before getting too optimistic on the stock. If gold prices rally, this will also help them.

As I often say to people, you can either track us or trust us, and I think right not, the market has a preference for tracking rather than trusting Codan, hence the muted SP.

chart

Codan (Ltd (CDA)

LAST UPDATED 16/12/2022 16:30

Close

chart

Codan (Ltd (CDA)

LAST UPDATED 16/12/2022 16:30