Codan: beaten up share price meets resilient growth

Codan (ASX: CDA) has risen to the occasion, closing out the first half of FY22 strongly with a 32% increase in sales to $257m. The company’s stock rose 13.4% as the market opened. 

Codan, which sells a broad range of communications, metal detection and mining technology products, has seen its valuation halve from around $3.5bn in June 2021 to $1.8bn.

Its declines are broadly consistent with the recent rotation away from technology stocks, with the S&P/ASX Info Tech Index down -27% over the same time period.

Last year, Codan acquired two communications companies which operate in the military and emergency response space. Codan said that both companies exceeded first half profit expectations. 

Codan expects net profit to be around $50m, a 21% increase compared to a year ago. 

The tenacious result was underpinned by the company’s conscious decision to invest in increased levels of inventory, enabling the company to successfully maintain supply to customers. 

Codan will provide its full first half FY22 performance and outlook on Thursday, 17 February. 

No mans land

From a technical perspective, Codan faces a long, uphill battle.

The recent share price declines have likely trapped a lot of shareholders, with the likelihood that upside will be met with selling pressure as investors exit their positions.

Codan price chart, TradingView

Codan experienced a 'death cross' on 27 October (50-day moving average crossing the 200-day moving average). Its shares tanked as much as -25% since the crossover.