Top broker Morgans has got its eye on ASX financial shares GQG Partners Inc (ASX: GQG) and Judo Capital Holdings Ltd (ASX: JDO) this earnings season.
In a new article, the broker explains what it is expecting from these companies in their upcoming reports.
GQG Partners to report tomorrow
The GQG share price closed today at $2.85, up 4.78%. It is also up 68.64% in the year to date.
GQG Partners is scheduled to release its 1H FY24 results tomorrow.
Morgans has an add rating on this ASX financial share and expects GQG's next report to beat market expectations.
Senior analyst Scott Murdoch said:
Key investment highlights include a potentially significant performance fee boost, notable operating leverage in the half, and impressive funds under management (FUM) growth of 29%, which supports a strong outlook.
Additionally, diversification through the Private Capital Solutions business adds value long-term.
Morgans expects GQG to report a 49% lift in management fees and a 65% improvement in its operating profit. The broker says strong revenue growth should improve the fund manager's margins, too.
ASX financial share may become Australia's most profitable bank
The Judo share price closed today at $1.36, up 0.74%. It is also up 36% in the year to date.
Morgans senior analyst Nathan Lead has a positive outlook on the small-cap ASX financial share.
He explains:
As its ROE improves with earnings growth, we anticipate so too should its Price to Book Value.
The company is reinvesting its earnings rather than paying dividends, which should result in high single-digit to low double-digit compound annual Book Value per share growth.
Lead acknowledges that Judo Bank is a higher-risk investment than the major ASX 200 bank shares.
However, this also means it offers the potential for higher returns.
He adds:
JDO presents a compelling opportunity if it meets its at-scale targets, potentially becoming Australia's fastest-growing, most efficient, and profitable bank.
Morgans says the projected FY24 profit before tax (PBT) is $107 million to $112 million, with gross loans of $10.5 billion to $10.7 billion.
The broker expects the FY25 PBT to rise to between $123 million and $129 million. That would equate to about 15% growth.
Morgans says if Judo achieves its at-scale targets, it could raise the ASX financial share's value to $2.50 per share.
The broker says ASX investors who buy Judo shares today could receive an estimated 13% per annum return over the next five years.
