I have held Codan since many years ago, remember buying it at around $2 mark and then it crashed to 50c due to the Chinese counterfeit problem. Luckily, I have averaged down and it has been awarding.
Codan is not for the faint hearted, it's a cyclical business thats facing competition in a niche market, luckily the BoD and CEO like Donald has realised that many years ago and slowly changing the diversity of the revenue stream.
They have made various acqusitions and also with success, this is very rare in the Corporate world and even Rarer on the ASX, I cannot think of many companies listed that has made good overseas acqusitions, remember the likes of Slater Gordon, Bunning's venture into UK market and the likes of ANZ trying to expand in Asia ?
What I like about Codan as I have posted in this forum before and this feeling is getting stronger is:
1. I can see a clear vision coming from the BoD and the management team, I know what they are trying to achieve and they are doing it one step at a time with success. they are buying businesses with cash or very low debt, the business bought will be complementary to Codan and also earning accretive from day 1, the business they are buying are usually founder owned and looking to offload at an attractive price to Codan and the management usually stays. This is a huge plus and they have executed it with almost perfection. Looking at Minelab, in which Codan acquired in 2008, at the time, Minelab was doing EBITDA of 9mil and now Minelab is generating 147M in EBITDA. 16 x in 16 years. Zetron is growing at high double digits since acquisition and growing well too.
2. I was quite worried when Donald quit as he has been instrumental in the success of Codan, however, now I have less worry because to be frank, I think it is not so vital now who is the CEO of Codan. the BoD has set a clear vision and strategy for Codan for the next decade, all the CEO needs to do is execute this strategy, and I think the various divisions such as Communication/metal detection are run by capable people and they can step up and run the whole corporation is the current CEO quits.
3. Codan is way more diversified now as compared to 5 years ago, we are still growing at 20% plus and with cashflows of a mature company, a great deal of our revenue comes from recurring work which is great for comfort. The world is not going to get any more peaceful and communications will play a vital role in the future, I think Codan will benefit immensely from this trend.
What is there not to like about codan ? yes, its a cyclical business with big ups and downs but the BoD is slowly changing that and with success. It's growing at double digit, stable revenue from the communication side and also a surprise (good or bad) from the Metal detection side, which looking at price of gold and money printing we are doing, I would think positive side is more likely.....with a BoD highly aligned with shareholders and actually doing business like its their own.... I really can't find another company this good on the ASX....
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