Codan the company and stock.

(I've looked at older threads and couldn't find one on this subject so I'm starting one, as it interest me.)

*Standard common sense warning: Get your own financial advice from a professional. The opinions here, are just that.

This is a thread to talk about Codan the company and it's stock price.

It's note worthy as Codan is a Australian company but, it's also become a world leader in Gold detectors. It's got that way by being smart and making the better mouse trap or in this case...gold trap. They've come along way in a short time against other more established players in the world. I think it's the only public company in the world that gets most of its money from making and selling metal detectors.

Here's a 10 stock chart. (http://finance.yahoo.com/q/bc?s=CDA.AX&t=my&l=on&z=l&q=l&c=)

It's 2013 annual report said it had 244M in revenue.

As some of you already know they have 3 divisions but, make a majority or their revenue from metal detectors. One could say Minelab is Codan.

It's troubles the past year are really interesting. In June 2013 the company warned about profits from it's sales in Africa. The stock fell 50%. That's a lot.

At first it seemed like the market over reacted but in Dec '13. The company said profit for the first half of 2014 to be about 4-5M. That's a big turn from 45M in profits for all of 2013. So the stock lost another 50%. 50% here...50% there. Before you know it, your talking about a lot of money. Year to date the stock is down over 80%!

Wow!...is Codan that dependent on African gold miners buying their product? It seems so. There was also some news about a inventory build up. However, if I'm running Codan I'm going to try and get the sales and profit up from other parts of the world...quick.

minelab couldnt keep up with demand from the Sudan goldrush or they had problems getting the stock to Sudan

whatever the case i was told "by a miners den staffer" that there were sudanese flying to australia to buy them in bulk.

assuming the miners den guy was being truthful as opposed to "marketing"

sounds like minelab stuffed up with over-manufacture when the Sudan rush slowed down.

tough luck . soak it up.

If you step back and look at it's current stock price, The company and where it at...You have to ask yourself. Is this company a gold stock? A mining service stock? A IT stock?

At first it looked like a buying opportunity. However, how many more people are going to buy a GPX 5000 who already haven't? I'm also shocked by the speed of the profit loss. They also, quickly back track on the dividend. I mean they had no choice but, they chopped that bugger hard and fast.

Some companies try to hang in there with the dividend or lower it a tad. Sometimes taking on a bit of debt if they know things are going to get better next year. This removes many investors and investors remember. I also have to worry about the next Africa. Where and when?

With that said...it is a gold play. If the US defaults...and I think it will at sometime in the future. Gold is going up. New people will buy gold detectors. You hope and think the R&D dept. comes up with a new better machine or invents a new technology that blow everyone away. (No, pressure R&D guys.)

At 72 cents...can it get back up to $3.95...where it was just 12 months ago? I'll leave that up to you.

Now do I buy a 5000 or put 5k into CDA? Hmmm.

how about asking what percentage of the fall in price was due to the release of the Garret ATX ?

what will the share price do if people decide the garret is not as good as the GPX5000 ?

maybe it will do nothing

maybe the share price is more than just minelab , maybe its more about the mining sector being a part of their P/L as Codan do have alot of sales from mining comms too right ?

HeadsUp said:

maybe the share price is more than just minelab , maybe its more about the mining sector being a part of their P/L as Codan do have alot of sales from mining comms too right ?

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In 2013 - 24% of sales came from communications and only 6% from mining services. I think they should work on increasing their sales in those 2 areas to make a buffer for the overall company.

Maybe they should consider a acquisition in the mining services. That sector is down and cheap. Codan's balance sheet could handle a acquisition of small to medium size. There by lowering the detector sales shock factor. The problem is the mining services stocks are cheap, as hardly any are marking money. However, it's what I would to to prevent another 80% fall in the price. I think seeing detector sales at 40-50% of the total company sales it more respectable and safer.

The shareprice seems to have found a trading range floor in the .65 - .70 area. I think the market is waiting for the next earnings report to see if the recent cost cutting is working.

Longer term I wonder about Codan. As I mentioned above, having such a large percentage in detectors is a bad thing. You're stuck to the price of gold among other things. I thought they should buy a company in the mining services to increase their 6% share. As I've been doing more research on everything gold plus the fact I finally got out there, I asked myself this. Minelabs makes good/great detectors. They have a strong brand in the industry. Why aren't they making other gold finding products?

They could try and buy (Garrett, Fisher, Whites etc) if they were even for sale but I don't think the FTC/ACCC would let them due to marketshare issues. So that leads us back to making "other" metal/gold finding products. Looking at the other companies product range, the first thing that hits you in the head is...Why aren't they making Airport or building security detectors? Like duh! You'd think with their R&D spend they couldn't come up with a better or at the very least the same quality products. Those machines would sell for a fair bit and I'd assume there'd be a decent margin on them.

Then it came back to branding. Look at Keene. Codan could buy them but, they are heaving in dredging products and it seems that every place in the world will soon outlaw it. Then there's highbanker makers like Royal Manufacturing and a bunch of others. Ya they could buy them but again, with the brain power they have in R&D couldn't the make a better sluice/HB or even gold pan. Plus, the hundred of other products that go with the process of finding gold/gems etc. Slap a MineLabs label on them.

Branding.
I just think Codan's MD is missing out on a massive branding opportunity. You design a better gold pan...get the patent and spit those puppies out. Let's be honest...I doubt it cost Garrett more than $5 to make/mold a bit of plastic. They are great but, it's still just molded plastic. Why can't Minelabs do that? You're shopping for a gold plan you see a Minelab. Hell, they are good are designing stuff...I'll give them a go.

Same thing for sluices/HBers. There are hundreds of people/companies making them. I bet some decent coin that we've all spent 20+ hours researching and trying to figure out the best one to get. If Minelabs came out with 5-8 different models I'd only be looking at them and happy to pay a premium as I know Minelab makes better mousetraps.

It's just a concern I have that they are only electronic inventors snobs. Detectors/electrical communications etc. They don't what to get their hands dirty...so to speak by becoming a prospectors helper, which they already are. I've looked and there isn't any public company in the world that does this.

Just a wasted opportunity to diversify the sales mix and provide some stability to the stock price. Anyways...I'm a marketing guy and it makes sense to me. If Mr.McGurk wants to hire someone for the job I'm available.

As of now I don't know if the stock is a buy or sell, either does the market. Let's see what they do in the future.

Is this company a gold stock? A mining service stock? A IT stock?

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or just another stock at the whim of the too big to fail market manipulators / market monopolists / re-hypothecaters / shorters / proprietors of legalised fraud / peddlers of imposter shares(cfds)

?

or blood suckers doing same with their clients segregated accounts

Interesting thoughts GB.
Wasen't it Codan that had a high level IT security breach into its military operations early last year?
It seemed to trace back to a IT hacking division of the Chinese Government ??
Didnt seem to hear much more about it after that. Just saw one report on the tele.

From .72 cents 12 months ago to $1 last month.

Now it's at $1.21. Wow!

Something is moving it. It must be the 7000 and new products.
However, we don't know how many units are moving.
Earnings report comes out in Aug. unless they come out and update the market sooner.

Ticked off I missed the boat. I felt it was going up under .80 but, was too chicken to buy some.

Just hope the GPZ and the gofinds pick them up, not as an investment opportunity but to keep giving us their world beating detector technology. But it is a dog eat dog world, never dreamt 20 years ago detector manufacturers would be anything but a small company player, but with the chinese keen to make replicas there seems to be a large market out there. Could be detectors have replaced the now less world demand for Codans HF radios, they are/were world leaders in that market back a bit, before sat phones. Whatever they do they do it well.

Serve's em Right, The World has been In recession Yet they continue to Raise the Price's of their Products, People are turning to other Companies For More Value for Money,
What would have been better would be if they had Lowered the Price's on their Machines by 5 or 10% or more, Then people would have continued to buy their products, But people are Skint and everyone is having to tighten their belts, So it is only Natural that they will buy another Product and still go detecting/Prospecting and when you consider that you can buy A Top of the Line C/J Machine and A top of the Line Fine Gold Machine and A PI, ALL for Less than A GPX 4800 and then you have All Base's Covered,

Minelab Make Great Machines No Doubt, But their Ego is Signing Cheques Their Arse's Can't Cash, They Raise the Price to boost profits but in fact that had the opposite effect, They Sold Less because of it, and if they had Lowered the price in Times of Need we would have bought them, If A Person is suffering to the rising cost of living and ML have a price Rise what Chance does A Person Have Of Buying One of their Machines when they have More Urgent Bill's To Pay, So The Only Other Choice is Either Give up Detecting or Buy Another Brand, I don't want to pay 15 1/2 K for a detector while everyone else gets it cheaper,

Hopefully they will read this thread and Consider all Aspects of what Has Been Said and do something about it,

I don't think the price of the GPZ is s scaring too many people off. I was talking to the guy in the detector shop in Charters Towers yesterday and he said he had sold 64 7000's and while out this morning I bumped into a couple of fossickers that had bought the 65th off him yesterday afternoon. They were complete newbies so it is not just the experienced people buying them. I have no idea how many 5000's get sold but the 7000 sales surprised me.

Magilla said:

I don't think the price of the GPZ is s scaring too many people off. I was talking to the guy in the detector shop in Charters Towers yesterday and he said he had sold 64 7000's and while out this morning I bumped into a couple of fossickers that had bought the 65th off him yesterday afternoon. They were complete newbies so it is not just the experienced people buying them. I have no idea how many 5000's get sold but the 7000 sales surprised me.

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I cant wait to get back home because over here the cost scares the life out of me at about $15,500 and the Importer told me he was only getting ONE in, I can buy a new small car for that kind of money,

In OZ if they had Sold them for $8-$8500 they would have sold about another 25% maybe more, It is just Not Worth That Kind Of Money and in these Trying Times They are really going out on a Limb when they hold out their hand for $10,700 and for those who sold their 5000s and lost about 3k to buy the 7000 brings the cost up to 14K, No matter how much gold the 5k found, A Person is still giving away 3k on top of paying out for the 7000,

Anyway, Going back to their Profit and Loss's, They chose to put this out of reach of many people when they should of Aimed for Volume, That would have given them a better base line,

Lets Just hope they can turn it around,

GOLD Billyen said:

From .72 cents 12 months ago to $1 last month.

Now it's at $1.21. Wow!

Something is moving it. It must be the 7000 and new products.
However, we don't know how many units are moving.
Earnings report comes out in Aug. unless they come out and update the market sooner.

Ticked off I missed the boat. I felt it was going up under .80 but, was too chicken to buy some.

Click to expand...

If the Go-find series sells well the shares could get to double from 12 months ago.

Source: Codan Limited Investor & Analyst Presentation For the half year to 31 December 2014
Available here:
http://www.codan.com.au/Investors/tabid/1376/Default.aspx

I'm not really concerned about the GPZ price. I assume Codan/Minelabs thought about it for a couple years and think that's what the market will pay. I'd like to buy one but, that's alot of money and my problem is finding time to use it.

Too stay on topic though...how many will they sell? I'd hope and assume there's a good margin in it for them. More to the point...I'm thinking about buying the stock. Has it had it's run and heading down? Still pissed I didn't buy at 80 cents.

The thing I'm thinking about is who's been buying the past month? Do these ppl. know something we don't? There's the Coden staff...the dealer network...ppl in the store. Happy customers?

Let's look at the numbers...

Codan last 12 months Net profit is 10.5 million (5.9 cents) Current price of $1.20 gives it a P.E of 21. High but, not unreasonable.

What's got me thinking is the last half was 6m...up from 4.5m. This was before any new products were released. So they now got 25,000 new orders for the new cheap Go find detectors. That's 7m in new sales.

The 200 million dollar question is how many GPZ have they sold since Feb.?
I'll pick a number out of my ass. 10,000. No way they sold that many but it's 100M if they did. They've sold more than 1 so, what's the number?

I'm trying to think in simple terms...how many could they sell. Anyone who's bought a 5000 and had good success... will buy one, I think. From looking at the flyer and I held one at the Easter show...it's a nice unit. Will it go another foot or 2? That's a whole new Australia/world to find gold.

Then you have to think most sales will come from the US and I assume Africa. Could they sell say...3000 units? That's 30M in new sales. That means the new report in Aug would have a nice pop. Maybe??? Net profit of 8-9M (4.5-5 cents) . If you assume they'll do the same next feb or better that's 10 cent EPS. Now you play the multiple game. 10 cents on a PE of 20 is $2 stock (which is it's current PE.) A PE of 30 means it's a $3 stock.
Then what if they sell 10,000 units over the next 2 years? Which seems like a possibility. It's a $5-$10 stock

It's at $1.20 now!
Do these current buyers know something?
I also can't stop thinking that the stock got to over $3.50+ on a machine that wasn't as good as the 7000. Plus, if Gold goes up a $200+, so will Codan's stock.

Or will the only sell a 1000 GPZ's and the stock goes down to 70 cents again.
What to do??!!!

The one thing that did impress me at the Easter Show is they had this large kids sandpit...they had 5-6 kids with their parents looking for $1 coins. Looking at those kids faces when they found that $1. There was a line up 20 kids deep too. Wow! Future bloody customers of the GPZ 25000!

Decisions, Decisions. Go for it, no don`t. Have the young been targeted by detector manufacturers before, seems this is a first and maybe will see a detector become a sort of "every household needs one", consumer item. Might compete with the skateboard, TV adds with rap music and funky detectors that you can change the colour of. No kid can be without one. Codan shares`ll hit $20!!!!!!
Heh go for it.

Magilla said:

I don't think the price of the GPZ is s scaring too many people off. I was talking to the guy in the detector shop in Charters Towers yesterday and he said he had sold 64 7000's and while out this morning I bumped into a couple of fossickers that had bought the 65th off him yesterday afternoon. They were complete newbies so it is not just the experienced people buying them. I have no idea how many 5000's get sold but the 7000 sales surprised me.

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hes not a very happy chappy at that shop and those figures as a result, amaze me !!
GT