Codan Limited (CDA) Covid-19 supply headwinds starting to bite FY20 Our View CDA now trades at 19.2/17.0x our Covid-19 downgraded FY20/FY21e EPS (9.9/8.7x EV/EBITDA). It’s not overly expensive when balancing: (1) Covid-19 impacts are quantifiable and measurable; (2) the business model remains viable; and (3) the balance sheet now holds $70m net cash. How many Small Ords. Index Constituents currently possess these same characteristics? Occasionally, Radio Communications may disappoint with unfavourable lumpy sales. Despite this, the medium-term organic growth trajectory remains appealing, underpinned by ongoing diversification of earnings (by product, segment and region) and industry leading R&D programs. An acquisition could be a sweetener but is not critical for now. On this basis, we maintain our Outperform recommendation.
Taylor Collison
CDA Price at posting:
$6.30 Sentiment: None Disclosure: Held
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