Record result •FY21 Underlying NPAT $97m increased +52% YoYand beatour estimate by+8%. Sales increased +26% YoYto $437m,underpinned by across the board strength in Metal Detection salesand a material step-up HoH in both the Communications and Tracking Solutions segments. Operating leverage apparent with 2H21 sales+25% HoH, NPAT +36%and margin +180bps. Stat NPAT $90.2m includes $5.2m acquisition related expenses and $1.9m restructuring expenses. •Significant investmentin manufacturing, inventoryand engineering. CDA invested further in its manufacturing capacity during the period and inventory more than doubled to $66mto minimise supply disruption and reduce freight costs.Engineering spend $33m comprised 8% of sales up from $31m pcp. •New products tracking well, demand strong.CDA isseeing strong demand in artisanal mining across all price points. The Gold Monster, Gpx6000 and Vanquish detectors are all performing well with continued geographic and big box retail expansion driving distribution. •Strong cash generation.Net cash from operating activities $131m was +26% YoY,withending net debt ending just $2mafter funding $174m for the acquisitionsof DTC and Zetron. The final dividend 16.5cps took full year dividend to 27cps, +24% YoYwith the payout policy to remain at~50% NPAT. Momentum continuing into FY22 •CDA note it is too early to give profit guidance, however the business is well placed to deliver another strong performance in FY22 with the record run rate of FY21 being maintained thus far in FY22.Demand for metal detection products remains strongwith Minelab expected to benefit from GPX6000 sales that should make a significant contribution to FY22 sales. Uncertainty around Tactical Communications and supply chain due to COVID-19 still exists. •MD/CEO transition:MD Donald McGurk has advised the board of his intention to retire from his role in the next 9-12m. He will remain as MD until a successor is appointed to ensure a smooth transition. Earningsand target pricerevision •FY22/23e+3%/+2%. TP +3% to $17.50psin line withearningsrevisions. Price catalyst •12-month price target: A$17.50based on a EV/EBITmethodology. •Catalyst: AGM trading update, M&A, Action and recommendation •Record result, strong momentum continuing into FY22. RetainOutperform
CDA Price at posting:
$12.02 Sentiment: Buy Disclosure: Held
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