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Highlights
- Judo Capital (ASX:JDO) reports a 70% jump in first-half profit.
- Shares see an 11.1% rise to $2.15, reflecting 80% growth in 12 months.
- Analysts optimistic about continued growth with improved funding mix and lending margins.
Judo Capital Holdings (ASX:JDO), the parent company of Judo Bank, has been making waves in the Australian stock market, particularly among the top performers in the ASX 200. The company saw its shares rise by an impressive 11.1%, reaching $2.15 during the afternoon trading session, continuing a strong upward trajectory with a remarkable 80% increase in stock value over the past 12 months. This surge follows the release of its robust first-half financial results, which showed a significant 70% increase in net profit.
For the six months ending December 31, 2024, Judo Capital reported a net profit after tax of $40.9 million, a sharp rise from the previous year’s figure of $24 million. Despite the increase in profits, the company did experience a slight decline in its net interest margin (NIM), which fell by 4 basis points to 2.81%. However, this was still in line with the company’s guidance, and analysts were reassured by Judo's ability to adjust expectations. Furthermore, Judo upgraded its second-half and full-year NIM guidance, forecasting an NIM in the higher range of its 2.9% to 3% target, with an eventual increase to 3% by June 2025.
This solid performance came as a result of strong lending margins and careful liquidity management, positioning the company well for future growth. Analysts at Macquarie pointed out that Judo's headline result was better than expected, boosted by lower impairments, although there was a slight miss in some areas, such as volumes and margins. Despite this, the overall outlook for Judo remains positive, with analysts anticipating 15% growth in pre-tax profits, underpinned by favorable macroeconomic conditions and potential future rate cuts.
UBS analysts also highlighted the company's improving funding mix, which could provide a solid foundation for ongoing success. With deposits now targeted to account for 70% of total funded assets, Judo is well-positioned to benefit from higher NIMs, potentially reaching 3% by mid-2025.
The overall investment sentiment for Judo Capital (JDO) is bullish, with analysts noting that the company’s ability to scale its operations while managing lending growth and credit risks will be crucial. If Judo continues on this trajectory, its valuation could be seen as quite attractive in the market.
Judo Capital (JDO) has demonstrated impressive financial strength, and its growth prospects remain strong, driven by solid fundamentals and an improving economic backdrop. Investors and analysts alike are keeping a close eye on the company's next moves as it continues to expand its market presence.
