Judo Capital Holdings (JDO) - Thrown to the mat
July 7, 2026
Judo Capital is a bank focused on lending to small- to medium-sized enterprises (SMEs). Judo Capital (JDO) cut its guidance for FY26 profit before tax by 9–11%, blaming increased bad and doubtful debt provisions related to three borrowers in different sectors, leading a shocked market to slash its share price by more than 40% on the day. The lender to small- to medium-sized enterprises (SME) said the need to increase its specific provisions – related to a construction company, a financial planning business and window manufacturer – had only become apparent in recent weeks.
The speed at which conditions for these three specific exposures deteriorated – none were on a watch list – is a significant concern for Ord Minnett and the broader market, raising questions as to just how rigorous and reliable Judo’s monitoring processes are, not to mention management’s credibility. We also highlight the large size of these particular loans – the combined exposure for Judo is $80 million, versus its average SME loan size of around $3 million – and question why Judo was making such large individual loans.
Post the trading update, we have cut our EPS estimates by 9.4%, 19.6% and 7.6% for FY26, FY27 and FY28, respectively, which drives a steep downgrade of our target price to $1.60 from $2.40. We also cut our recommendation on Judo to Hold from Buy despite the apparent value on offer, given uncertainty around the company’s processes and the time it will take for management to rebuild market confidence.
Insights that count
Discover the best opportunities to outperform the market. Our research team dig deep into the market, company and stock data to bring you insights others might overlook.
ResMed (RMD) – Out of the Matrix
ResMed designs and manufactures medical devices and cloud-based software applications for the sleep apnoea and respiratory care markets.
Orora (ORA) – Bottled up
Orora designs and manufactures aluminium cans and glass bottles, principally for beer, wine and spirits, in Australia, New Zealand, the US and Europe. Orora was incorporated in 1949 and is headquartered in Hawthorn in Melbourne.
Virgin Australia Holdings (VGN) – Keeping it simple
Virgin Australia is the nation’s No.2 airline and offers domestic air services under its own brand and overseas travel via its international partners, which include Qatar Airways, Singapore Airlines, United Airlines, Air Canada, Air New Zealand, Hawaiian Airlines, and All Nippon Airways, and owns the Velocity loyalty business.
.webp)