Household Wealth and Lending Data Bode Well for Banking Sector Stocks

This report is an updated version of the report published on 1 July 2024 at 2:58 pm AEST.

Company Overview: Judo Capital Holdings Ltd (ASX: JDO) is an Australian bank with a focus on lending to small and medium enterprises (SMEs).  Heartland Group Holdings Limited (ASX: HGH) is a financial services company headquartered in New Zealand. It operates across various segments including Motor, Reverse Mortgages, Personal Lending, Business, Rural, StockCo Australia, and Australia.  Kalkine’s Market Event Report covers the Investment Summary, Event Summary, Data Insights & Analysis, Key Financial Metrics, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Investment Summary

Event Highlights

Data Insights and Analysis

Key Drivers versus Key Challenges

Based on the above data, two ASX stocks have been identified to showcase the momentum.

1) ASX: JDO (Judo Capital Holdings Ltd) (Recommendation: ‘Speculative Buy’ at AUD 1.233, Potential Upside: Low Double-Digit, Mcap: AUD 1.39bn)

Company Overview:  JDO is an Australian bank with a focus on lending to small and medium enterprises (SMEs).

The stock has witnessed a correction of ~1.96% in last one month, and over the past three months, it declined by ~6.01%. The stock has a 52-week low and 52-week high of AUD 0.792 and AUD 1.440, respectively and is currently trading above the 52-week high-low average. JDO was last covered in a report dated ’30 January 2024’.

2) Heartland Group Holdings Limited (ASX: HGH) (Recommendation: ‘Speculative Buy’ at AUD 0.900, Potential Upside: Low Double-Digit) (M-cap: AUD 837.50mn)

Company Overview: HGH is a financial services company headquartered in New Zealand. It operates across various segments including Motor, Reverse Mortgages, Personal Lending, Business, Rural, StockCo Australia, and Australia.

The stock has witnessed a correction of ~43.61% in last nine months, and over the past one year, it decreased by ~39.51%. The stock has a 52-week low and 52-week high of AUD 0.890 and AUD 1.690, respectively, and is currently trading below the 52-week high-low average. HGH was last covered in a report dated ‘06 May 2024’.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 1 July 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual’s appetite for upside potential, risks, holding duration, and any previous holdings. An ‘Exit’ from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.