Judo Capital Holdings Ltd (ASX: JDO) shares are rebounding very strongly from yesterday's selloff.
In morning trade, the ASX All Ords small business lender's shares are up 14% to $1.13.
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Why is this ASX All Ords stock jumping today?
Investors were hitting the sell button on Monday after analysts at Citi downgraded Judo Capital's shares all the way from a buy rating to a sell rating.
The broker made the move on the belief that the market was expecting far too much from the company in FY 2025.
However, an update from the ASX All Ords stock today appears to suggest that those expectations may not be as outlandish as Citi believed based on its performance so far in FY 2024.
According to an update this morning, Judo Capital expects to release a half year result that is ahead of consensus estimates.
It notes that its unaudited profit before tax (PBT) was $67 million for the first half, which is up 24% on the prior corresponding period. Management advised that this was driven by continued above-system lending growth, strong net interest margins, continued investment in growth, and minimal write offs.
In respect to lending, Judo achieved net lending growth of ~$800 million for the six months, which represents approximately three times system business credit growth. This was achieved with a net interest margin of 3.02%.
Second half guidance
Looking ahead, the ASX All Ords stock expects more of the same in the second half. It is forecasting a second half PBT of $40 million to $45 million, resulting in FY 2024 PBT of $107 million to $112 million.
And while it is expecting its net interest margin to soften to between 2.85% and 2.90% for the 12 months, it believes the second half will mark a trough in margins.
Finally, looking to FY 2025, Judo is targeting profit growth of 15% or higher for the financial year.
