CDA - Codan Limited

[So_Cynical]

May be the falling gold price means that metal detector demand will fall

That's the conclusion i came to..pretty much the only conclusion that's possible without an announcement.

Got my eye on this one

The cue starts behind me.

 

[prawn_86]

Speeding ticket finally issued yesterday and a standard "We know nothing" reply

 

[prawn_86]

is looking pretty good now i think

I'm with you.

The cue starts behind me.

Has rebounded strongly after the speeding ticket. Did any of you gentlemen managed to pick the recent low?

 

[VSntchr]

Has rebounded strongly after the speeding ticket. Did any of you gentlemen managed to pick the recent low?

First lot at 2.86 (tried to ammend order overnight to 2.70 but must have done it incorrectly as I was tired)..

Second lot at 2.70

Tried for a third at 2.50 but didn't get them.

I have wanted in on CDA as a long termer, so one lot is held for this purpose. The other lot I intend to sell on close today and take the quick ~15%

 

[finicky]

Wouldn't mind having another bite if Codan returns to 2.50
Chance of support looks significant there, and if not, stuck with a few more shares in a quality divvy paying company.

These days I hesitate to mention Skaffold's future valuations as they have no reliability. The stock was upgraded to A1 for the current year on the basis of results for H1 and guidance for H2. Intrinsic values for FYs 13, 14, and 15 are currently 6.57, 5.39, and 4.86

I stress current, the values are ephemeral and blow this way and that on results, outlooks, and which drug the analysts are on. Only 2 analysts are feeding earnings estimates for Codan. Might be of some interest though, and if taking the lowest as a guide - 4.86 for FY15 - suggests share is at a discount. The weak trading might be mostly correcting the rapid rise since September 2012.

Don't think it's likely that the struggling gold price will dampen enthusiasm of prospectors or artisan miners.
The mining technology and communications division is not a big contributor to revenue yet.
The earnings guidance given in April last year was alerting market to an upgrade. Looking back, there's usually some business update around April but not always? Maybe just nothing to add to guidance given when reporting H1 - "Second-half profit for FY13 expected to be as strong as first half"

 

[ROE]

Watch it...go Codan
http://www.abc.net.au/4corners/stories/2013/05/27/3766576.htm

 

[finicky]

^^^ Thanks for the link

As I got it, a Codan employee visiting China uses his laptop via the hotel's wifi and it gets infected with malware that is then transmitted to the company's computers. Now the Chinese have sensitive files about the military radios that Codan makes. A bit confidence sapping.
I vaguely thought they were on top of the detector counterfeiting issue which has been around a while.
With the M.D being restrained in his comments about the hacking and saying it could be a national security issue I wonder how free he feels to discuss any commercial implications.
So possibly one reason for the selling lately.

 

[finicky]

Timely damage control. However McGurk was not overflowing with confidence that they could secure the intellectual property against China during the 4 Cnrs interview. Very honest sounding guy imo.

28 May 2013
ASX ANNOUNCEMENT
Security of Intellectual Property

Australian electronics and communications company Codan Limited (ASX:
CDA) acknowledges that like many international companies and
governments, the threat posed by third parties trying to access computer
systems is a real one.

The Company understands that the nature of its products may cause the
Company to be a target of “hackers”, and as reported in recent years the
unauthorised manufacture of counterfeit gold detectors in China has
heightened the Company’s awareness of this matter.

Strong action has been taken to protect our information against Chinese based counterfeit gold detector manufacturers, which has included the Company implementing processes and controls to protect the computer
systems that store the Company’s intellectual property.

Mr McGurk, Codan’s Managing Director and CEO, said that the protection of
the Company’s intellectual property is fundamental to our business, and our
systems and controls have been designed to defend against this threat.

The establishment of systems to defend against the threat of unauthorised
third parties gaining access to sensitive intellectual property is an ongoing
challenge which must continually evolve as “hacking” techniques change and
increase in sophistication.

In response to recent media speculation about computer hacking, Mr McGurk
stated that the Company has no evidence that any intellectual property in
either its metal detection or communications business has been obtained by
unauthorised third parties.

Michael Barton
Company Secretary

 

[ROE]

I like the management and its honesty of confonting the problems
I Bought more to celebrate -

they proved to me they are in the league of Flight centre Graham Turner, Dominos Don Meij and Credit corp Simon Calleia

 

[Huskar]

Downgrade to $45m NPAT. Wasn't gold price affecting the SP after all so much as civil unrest.

Always the unknown unknowns!

Still if 25c EPS then 12x P/E not at all unreasonable and $3 at least fair value on back of envelope calculation...

 

[skc]

Downgrade to $45m NPAT. Wasn't gold price affecting the SP after all so much as civil unrest.

Always the unknown unknowns!

Still if 25c EPS then 12x P/E not at all unreasonable and $3 at least fair value on back of envelope calculation...

Market says $2.30.

May be they don't believe it's purely due to civil unrests...

 

[McLovin]

Market says $2.30.

May be they don't believe it's purely due to civil unrests...

Probably doesn't help that they announced it at 3:30 on a Friday.

 

[ROE]

What a shocker .... Dont give out high expectation if there is a chance you wont make it
Maybe management not as good as I think

 

[skc]

Market says $2.30.

May be they don't believe it's purely due to civil unrests...

Nasty close! It's now $1.90. Doesn't help that it's a thin stock at the best of times.

Probably a bit overdone if civil unrest was indeed the cause.. and I doubt metal detector sales are truely that correlated with the gold price.

But let's shoot first and ask questions later.

 

[McLovin]

Downgrade to $45m NPAT. Wasn't gold price affecting the SP after all so much as civil unrest.

Always the unknown unknowns!

Still if 25c EPS then 12x P/E not at all unreasonable and $3 at least fair value on back of envelope calculation...

The market is probably working on the 1H result an outlier. 2H result will be ~$18m, annualised that is only 20c EPS.

Who knows, I need to go back and have a look at what I wrote about them.

 

[Ves]

Market says $2.30.

May be they don't believe it's purely due to civil unrests...

I'd hate to be cynical, but civil unrest in Africa isn't exactly a rare thing, is it?

Agree with McLovin about the market annualising the 2nd half earnings rather than the 1st. First half earnings are well above trend growth and the operating margins are well above anything they had previously achieved. Almost 10% over average.

I made a slightly longer post on hotcopper before. Same gist.

 

[Country Lad]

Exactly the breakout size from the patterns you would be hoping for. Unfortunately in the wrong direction. The P&F chart did point to a reasonable downturn.

Cheers
Country Lad

 

[VSntchr]

Based on where we are in the half year it is very hard to gauge revenue/earnings going forward due to the fact that we don't know how long this impact on earnings has been occurring for. If it is really just in the last quarter - then if that is carried on into the next FY...well...you get the picture...

If we look at operating margins on a more historical (and conservative) basis of say 23% going forward, and expect revenue in the area of $200m this year we can then throw out some scenario's....

Revenue for next year could come in at flat. It could come in at -25%, but it likely won't come in much higher. Assuming instant margin compression and a revenue drop of 25% for 13/14 FY I think its worth around $2 - $2.10....

But the flaw with this valuation is that my estimates for revenue are very basic...until we see the full year commentary (quarter on quarter cash flow would be better!), it really is up for anyone to guess...

 

[skc]

These days I hesitate to mention Skaffold's future valuations as they have no reliability. The stock was upgraded to A1 for the current year on the basis of results for H1 and guidance for H2. Intrinsic values for FYs 13, 14, and 15 are currently 6.57, 5.39, and 4.86

I think I've found the reason for the fall.

Waiting for RM to tell us how he's sold at the top 4 months ago.

 

[VSntchr]

I think I've found the reason for the fall.

Waiting for RM to tell us how he's sold at the top 4 months ago.

I knew you'd find the reason for us