Codan Leads ASX 200 Today: What Is Driving The Shares To New Highs?

Codan shares (ASX: CDA) rocketed to an all-time high on Monday after the ASX-listed technology company delivered a stunning mid-year trading update, projecting H1 FY27 net profit to surge at least 125% on the back of extraordinary demand for its unmanned systems communications technology.

The move extends a breakout that has been building since the company’s FY26 result in August, with markets increasingly valuing Codan as a growth-rated defence communications platform with a gold-linked second engine, not as a cyclical electronics maker.

The Codan share price has added 21.27% to A$63.05 into the close, having touched a fresh intraday high of A$63.79 earlier in the afternoon. The stock is comfortably the top performer on the ASX 200 for the day, and builds on what has already been a mighty run in 2026, with the shares up 117% since the start of the year.

Upgraded Guidance Drives Codan Shares Higher

The centrepiece of Monday’s update was a group H1 FY27 net profit after tax (NPAT) guidance of not less than A$160 million, representing an increase of at least 125% from A$71.2 million in the prior corresponding period. Perhaps more striking is that this single half-year result is expected to represent approximately 91% of Codan’s entire FY26 full-year NPAT of A$175.2 million, illustrating just how dramatically the earnings trajectory has shifted.

The engine driving that acceleration is the company’s Communications division, which provides tactical radio systems, mesh networking, and radio-frequency components for unmanned aerial systems, commonly known as drones. H1 FY27 Communications revenue is guided to A$400 million to A$410 million, an increase of 80 to 85% compared with A$221.8 million in H1 FY26. Equally significant is the margin story: the Communications EBIT margin is expected to reach approximately 40% in the half, a substantial step up from 26% in H1 FY26 and 31% across the full FY26 year. That kind of operating leverage, achieved at scale, is rare in any sector.

A key driver of that revenue surge is the sharp rise in sales into active conflict regions, which are expected to account for roughly 50% of H1 Communications revenue, compared with approximately 20% in the prior corresponding period. The company has not named specific geographies, but the Ukraine conflict and ongoing tensions across the Middle East are widely understood to be significant demand sources. Importantly, Codan also flagged that growth outside conflict zones is running at approximately 20% year-on-year, suggesting the business is not solely dependent on war-driven procurement cycles. The company supplies radio-frequency communications components to approximately 50 drone manufacturers across the United States and Europe, a position that creates meaningful switching costs and deep integration into customers’ mission-critical systems.

As a result of the H1 momentum, management upgraded its full-year FY27 Communications revenue growth target to 30 to 40%, up from the approximately 20% target set at the August FY26 results. That implies full-year Communications revenue of approximately A$658 million to A$709 million, with the implied H2 FY27 range of A$248 million to A$309 million sitting broadly in line with or above the A$284.4 million delivered in H2 FY26.

On the other side of the business, the Minelab metal detection division is also performing ahead of expectations. H1 FY27 revenue run-rates are tracking slightly above H2 FY26 levels, supported by the commercial launch of two new products, the GPZ 8000 and Gold Monster 2000 detectors, and by elevated global gold prices that continue to incentivise artisanal and recreational prospectors, particularly across African markets. While Minelab is a smaller contributor to group earnings than Communications, it provides meaningful cash flow diversification and a degree of insulation from the volatility inherent in defence procurement cycles.

A Pattern of Outperformance

Today’s upgrade is the latest in a sequence of upward earnings revisions that stretches back since the turn of the year. In January, a trading update flagged H1 FY26 revenue up 29% to approximately A$394 million and underlying NPAT up around 52% to at least A$70 million, both ahead of consensus estimates at the time.

Then in April, management lifted full-year FY26 NPAT guidance to approximately A$170 million, representing roughly 60% growth on the prior year and achieving the company’s 30% Communications margin target a full 12 months ahead of the original schedule. The August 2026 full-year result then delivered NPAT of A$175.2 million, a 69% increase on FY25 and a 3% beat on guidance, accompanied by a 70% lift in the full-year dividend to 48.5 cents per share.

Under-promising and over-delivering has been a consistent feature of Codan recently, giving bulls plenty of confidence heading towards the final quarter of calendar 2026.

What Comes Next?

The scale of the H1 FY27 result raises questions about sustainability into the second half. Management was measured in its commentary, noting that demand visibility beyond a three-month window in conflict regions remains limited, a candid acknowledgement of the inherent unpredictability of defence procurement in active theatres. The implied H2 FY27 Communications revenue range of A$248 million to A$309 million is wide, reflecting that uncertainty, and the midpoint sits below the exceptional H1 run-rate, suggesting management is not extrapolating the conflict-driven surge indefinitely.

From a valuation perspective, the stock’s 117% year-to-date gain and the fresh all-time high mean the market is pricing in a significant continuation. The company’s non-conflict growth rate of approximately 20% is strong in absolute terms, but it is the conflict-driven component that has delivered the extraordinary margin expansion, and that component carries an inherently higher degree of uncertainty.

The technical picture helps explain why momentum money keeps engaging. The stock trades well above its 50-day moving average of A$45.16 and its 200-day average of A$39.09, with the 50-day above the 200-day in a classic uptrend alignment. An ADX reading near 25.7 and rising points to a trend with genuine strength behind it, whilst today’s price has also cleared the upper Bollinger band around A$53.78, with band width near 23%, a sign of volatility expansion that accompanies breakout phases. None of that guarantees follow-through, but it confirms the move is building on an established uptrend with broad participation.

On the structural side, the bull case remains compelling. Global defence budgets are expanding at a pace not seen since the Cold War era, with NATO members committing to higher spending targets and Indo-Pacific nations accelerating procurement programs. Codan’s position as a supplier to approximately 50 drone manufacturers across the US and Europe places it at the intersection of two of the most powerful spending themes in the current geopolitical environment: unmanned systems and secure battlefield communications. Those are not transient procurement cycles.

The stock is clearly running hot, with price discovery phases notoriously volatile. Add to that a series of upgraded fundamentals, and a conflict backdrop that does not yet appear to show signs of easing, and you have results like today. A huge day for Codan bulls that see’s the company rated as the most valuable tech stock on the ASX, with the market cap of 11.53bn above that of WTC (11.01bn), XRO (9.87bn), and TNE (9.63bn). Unsurprisingly after a move like this, the RSI has stretched into overbought territory, with the reading of 83.29 positioning the stock into an area that some may want to see cool off before taking new positions.