Codan Limited released their FY2021 Earnings Report to the marker on 19th August 2021. Unveiled in the Codan Limited FY21 Earnings Report the group announced record revenue, profits and dividends!
Codan Earnings Report 2021
The group announced record revenues, profits and dividends to shareholders. Shareholders seemed to be a little let down by the group’s record results potentially expecting more of the company trading on a PE of 44x
Codan Limited FY21 Earnings Report Summary:
- Highest full-year sales in the company’s history
- Record statutory net profit after tax of $90.2 million, an increase of 41%
- Underlying net profit after tax of $97.3 million, an increase of 52%
- Underlying Earnings per share of 54.0 cents, up 52%
- Return on equity of 36%
- Excellent cash generation, close to zero net debt after funding circa $174 million for acquisitions
The group in the year announced the sale of their MineTec business to mining and construction equipment supplier Caterpillar for $18million cash. Surely the group could have fetched a little more for this business especially from CAT who has a massive market cap of over US$118 billion.
The group also Domo Tactical Communications (DTC) and Zetron in May 2021. This signals to us that the group is really focussing on their communications and metal detection segment in order to streamline the business.
Codan Limited Share Price
Quite interesting that the groups share price fell ~8% on the news of record revenues. The company is trading on a PE of 44x which sets the bar high, however, with the group growing underlying EPS by 52% to 54 cents per share one would have expected this result to meet expectations.
The Codan share price has had an excellent run-up this year with the company up 82% to $16.18 per share with a market capitalisation of $3.3billion. This has outpaced the ASX200 index which returned ~24% in the comparable period.
|Codan Share Price (CDA ASX)||$16.18 per Share|
|Codan Market Capitalisation||$3.3billion|
|Codan Price to Earnings Ratio||44x|
Codan Limited Dividend FY21
Codan announced in their FY21 annual report a record dividend of $0.165 per share fully franked. The group has been growing dividends YoY since 2014, with the dividend being relatively stable during that time.
The group paid an FY21 dividend of 1.67% at the current share price of $16.18 per share. This is below the average of the top 25% of dividend-paying companies on the ASX who pay on average of ~4.7%
What is the CDA FY21 Dividend? The Codan FY21 final dividend is $0.165 per share. This means CDA ASX paid out a total of $0.27 per share to investors in 2021. This amount was fully franked. The group does not currently offer a dividend reinvestment plan to shareholders.
Codan Limited FY21 Report – Prophets Take
Investors seem a little bit disappointed by the group’s report, selling the price down 8% by the end of the day. In our opinion, this was a decent report, with earnings and revenue growing by 52% and 26% respectively on the comparable prior period.
The earnings growth outperformed the relatively high PE as compared to the broader ASX. Codan trades on a PE multiple of 44x, however, is growing earnings at 52% this in our opinion is also a decent outcome. The group has a very low debt to equity ratio with $0 being carried on their balance sheet.
As Codan’s share price seems to be linked inexplicitly to the reliance on gold and gold mining. The group has tried to expand their revenue source by way of their Minetec and communications business, however, have recently announced the sale of MineTec. The bulk of the business will now be focused on revenues from their metal detection and communications segments.
We are more than happy to hold Codan Limited ASX CDA in our portfolio through our holdings in the ASX200 ETF, VAS.