Codan's Defence and Gold Detection Story Meets a Valuation Debate
A stellar profit upgrade confirmed Codan's transformation into a global communications provider, but fund managers are split on whether its rich multiple is justified.
7 Oct 2026 · 3 min read
In short
Codan delivered a stellar trading update guiding to $170 million of net profit, a more than 10% upgrade, driven by faster than expected margin expansion in its Communications division.
The business combines two hot investment thematics, defence communications and gold detection through its Minelab brand, but Investors Mutual Limited views its roughly 40 times earnings multiple as too rich given limited long-term contracted revenue.
Fund managers remain split, with Atlas Funds Management rating the stock a sell over gold detector demand concentration in West Africa, while others including Ten Cap and Ophir Asset Management stay positive on its defence and mining exposure.
Codan transformed from an Adelaide metal detector maker into a global defence communications provider with a stellar profit update, delivering more than 10 percent upgrades to profit guidance, even as fund managers increasingly debate whether its roughly 35 to 40 times earnings multiple has run ahead of what a business without much long-term contracted revenue deserves.
Two hot thematics in one business
Ten Cap held at hold, saying it had been a shareholder for quite some time and likes the company, which has done incredibly well diversifying its sales from the metal detector business into communications, playing well into the broader defence thematic as countries increase spending. Atlas Funds Management took the opposite view, rating it a sell, agreeing the military and communications side is very solid and has genuinely improved the quality of earnings, but describing the gold detection business as the icing on the cake, selling a lot of retail gold detectors into West Africa. Ophir Asset Management said Codan carries the highest multiple in its portfolios currently, describing two completely different businesses that are both exactly what investors want right now: defence, through its communication systems, and gold mining exposure through its detection equipment.
A stellar profit update, faster-than-expected margin expansion
1851 Capital said Codan, capped at over $7 billion on a price to earnings ratio of 35 times, has a couple of fantastic businesses, one in communications and another called Minelab in gold detecting, having put out a really strong trading update guiding to $170 million of net profit for the year, a more than 10 percent profit upgrade at the time. Maple-Brown Abbott said its highlight was Codan's stellar profit update, with faster than expected margin expansion in the Communications division, calling it a great example of why it loves small-cap investing and going on the journey with companies, describing a business that began as an Adelaide-based metal detector maker and has quietly evolved into a global provider of advanced communications solutions across military and unmanned systems.
What began as an Adelaide-based metal detector maker has quietly evolved into a global provider of advanced communications solutions across military, unmanned systems and more, with faster-than-expected margin expansion in the Communications division.
— Maple-Brown Abbott, Article, May 2026
A valuation debate splits even the bulls
Investors Mutual Limited held at hold on valuation grounds, calling Codan a fantastic business it can't find any knocks on, with few hotter exposures right now than drones and gold mining, and crediting CEO Alf Ianniello with a great job on execution, but arguing 40 times earnings is a little rich for a business that doesn't carry much in the way of long-term contracted revenue. Hayborough Investment Partners also held at hold, saying it is hard to argue with anything just said, acknowledging fantastic thematic tailwinds behind the business including its ZTron exposure in the US, where a delay had emerged that it does not see as a huge issue, but concluding the valuation sits somewhere between a buy and a sell.
You can't find any knocks on them, right? You can't find probably two hotter exposures right now than drones and gold mining. For us, 40 times earnings is just a little bit rich for a business that doesn't have much in the way of long-term contracted revenue.
— Investors Mutual Limited, Article, May 2026
What fund managers say they are watching next is continued margin expansion in the Communications division, resolution of the ZTron delay in the US market, sustainability of West African gold detector demand underpinning Minelab, and whether the stock's rich valuation proves justified given the strength of both thematic exposures.
Questions
Why did Codan's profit guidance get upgraded so significantly?
Codan guided to $170 million of net profit, a more than 10% upgrade, driven by faster than expected margin expansion in its Communications division as it continues transforming from a metal detector maker into a global defence communications provider.
What are Codan's two main business exposures?
Codan combines a defence communications business selling systems for military and unmanned applications with its Minelab brand, which manufactures gold detection equipment sold heavily into markets including West Africa.
Why do some fund managers think Codan's valuation is too rich?
Investors Mutual Limited argues Codan's roughly 40 times earnings multiple is too rich for a business that lacks significant long-term contracted revenue, even while acknowledging it has strong exposure to hot themes like drones and gold mining.
21 managers, 49 comments, with each manager's latest recorded position.
See CDA