Hidden Champions of Australia
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Australia is part of my coverage universe. I just haven't focused much on the country in the past few years. The only deep dives I've published so far have been on Codan, Tabcorp, Sierra Rutile and Ten Sixty Four.
In this post, I'll delve deeper into Australian companies that dominate their niches and might be able to compound their capital at a rapid rate. I've searched for similar "hidden champions" before, across Taiwan, Indian ADRs/GDRs, Chinese ADRs, Hong Kong, Singapore and Malaysia.
Please note that I pay no attention to share prices, so do not take the following discussion as investment advice. I'm simply trying to identify some of the best businesses in Australia.
Table of contents:
1. A top-down view
2. Screening for candidates
3. Hidden champions of Australia
3.1. CSL
3.2. Macquarie
3.3. ResMed
3.4. Atlassian
3.5. Aristocrat Leisure
3.6. Brambles
3.7. Pro Medicus
3.8. REA Group
3.9. WiseTech
3.10. Xero
3.11. Computershare
3.12. Lynas Rare Earth
3.13. James Hardie
3.14. Cochlear
3.15. ASX
3.16. Orica
3.17. Codan
3.18. Treasury Wine Estates
3.19. Ansell
3.20. Breville
3.21. Catapult
3.22. IDP Education
3.23. Nanosonic
3.24. Jumbo Interactive
3.25. Seeing Machines
4. Conclusion1. A top-down view
To start with the absolute basics: Australia is obviously a massive continent, comprising the Mainland and Tasmania. However, despite its size, it has only 28 million people, most of whom live near urban centres such as Sydney, Melbourne, Adelaide, Brisbane and Perth.
Australia became a federal state in 1901 by combining six British colonies into one: New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania. Today, it also has two additional territories: the Australian Capital Territory and the Northern Territory.
There's been some degree of economic specialization over time. New South Wales has the greatest population and a Sydney service economy centered around finance, healthcare and tech. Victoria Tasmania sells agricultural products, salmon farms, forestry and beverages. South Australia, the home state of Adelaide, is big in defense, vineyards and copper mining. Western Australia is mostly desert and rich in natural resources such as iron ore, gold and LNG, with most companies based in Perth. Queensland has large coal deposits and attracts tourists to the Great Barrier Reef. The Australian Capital Territory's Canberra focuses on government services, including defense and cybersecurity. Finally, there's the Northern Territory, which has natural resources, including LNG, as well as defense operations.
Australia's GDP per capita has been relatively close to that of the United States, although it has fallen behind in recent years. It's currently around US$60,000. Some blame record immigration, but it could also be due to an undervalued currency or exposure to falling commodity prices.
Living standards remain high, with residential floor space per capita close to Canada's, though lower than that of the United States:
What explains this success? Clearly, a wealth of resources, especially in Western Australia. In fact, the GDP per capita for Western Australia is almost double that of Victoria and South Australia. Another explanatory factor could be a strong rule of law. I'm also noting that much of Australia's exports are to the United States, and it might help that they share the same language.
Trading in stocks has been around since the 1800s, following the gold rush in Victoria and New South Wales. And independent exchanges were popping up in Brisbane, Adelaide, Hobart and Perth. In 1987, they eventually all merged formed the Australian Securities Exchange, with its headquarters in Sydney.
Research shows that between 1900 and 2019, Australian equities have performed exceptionally well, with real annualized returns of +6.8% per year:
I've downloaded a list of all companies with primary listings in Australia that have a market capitalization above US$50 million. The list has a total of 750 companies. If your cutoff point is US$1 billion, you'll end up with a list of about 200 companies.
The key benchmark index S&P/ASX 200 is a value-weighted index with the 200 largest companies, too. It's performed well, being in a clear bull market since 2023:
That said, it's definitely not a cheap market anymore. The S&P/ASX 200 now trades at a P/E of 22.6x. And that's an average, so many stocks trade well above that - potentially due to the impact of Australia's Superannuation funds, which buy local shares without much regard for value. The index-level return on equity of 15% is on par with India's and Taiwan's, though lagging the United States' 20% level.
Here's what the market cap composition looks like:
As you can tell, financials and the materials sector make up more than 50% of the total market cap. The rest is a mix of industrials, consumer, healthcare, IT stocks, etc.
The largest companies with primary listings in Australia include banks such as CBA, NAB and Westpac, miners such as BHP and Fortescue, industrials companies such as Brambles, consumer names such as Wesfarmers and Aristocrat Leisure, healthcare companies such as CSL and Cochlear and many others.
After spending almost a week researching Australian-listed stocks, I'm definitely impressed with the quality of some of them. It's also worth noting that Australian shares are accessible through Interactive Brokers, and all disclosures are made in English.
2. Screening for candidates
Let’s dig deeper into individual companies that exhibit hidden champion-like characteristics, including:
- High historical average return on equity
- High growth in earnings per share
- Strong share price performance
So I've identified the top ten companies in Australia in terms of a high return on equity:
However, almost all of these companies are exploration companies that have one-off success. While some management teams are clearly superior, I doubt that their success will be replicable.
But in any case, let me talk about what these companies do. Lion Rock Minerals is an early-stage Cameroon-based exploration company for rutile, which is a feedstock for titanium dioxide. Tali Resources is another exploration company operating in West Arunta in Western Australia. Fluence Corporation sells water & wastewater treatment systems and earns recurring revenues from operating and maintaining completed plants. Elsight sells "Halo" branded connectivity hardware and software that links 5G, radio and satellite links so that drones can stay connected. Northern Minerals develops the Browns Range heavy rare earths project. Recce Pharmaceuticals is an early-stage biotech company developing a new class of anti-infectives. It's unclear why its return on equity is high. Metal Powder Works sells specialty metal powders for additive manufacturing / 3D printing. Qantas Airways is the largest airline of Australia. Finally, Broken Hill Mines mines silver-lead-zinc concentrates from the Rasp and Pinnacles mines at Broken Hill in New South Wales.
Let's take another approach instead. Here are the Australian companies that have performed best in terms of share price return CAGR:
The top 10 includes Capricorn Metals, which is a gold miner in Western Australia. Then you have Pro Medicus, which produces a SaaS type medical imaging software that lets radiologists view CT and MRI scans fast. ioneer is a lithium miner with a US operation in Nevada. Genesis Minerals is another gold miner with a presence in Leonara in Western Australia. Alpha HPA is a high-purity alumina and aluminium salt operation used in LEDs, semiconductors and batteries. Bellevue Gold is another gold miner in Western Australia. Lynas Rare Earths is the largest rare earth miner outside of China, and therefore strategically important. HUB24 is an investment and wealth management platform, allowing financial advisors to manage client portfolios directly through the website. Codan is the world's leading producer of metal detectors, and also sells high-frequency radios for defense and NGO use. Finally, NRW is a mining and civil contractor, building mines, roads, dams, railways, etc. I think that several of these companies exhibit hidden champion-like qualities.
Finally, here are the top 10 companies in terms of their yearly earnings growth:
This list also includes Pro Medicus, the medical imaging SaaS company. Then we have Joyce Corporation, a franchisor of consumer chains, specifically bedding and kitchen renovation brands. Capricorn Metals is another gold miner in Western Australia. Waterco manufactures pumps, filters, heaters, tanks, etc. Lovisa Holdings is a jewelry chain with its own products sold in proprietary stores around the world. Pinnacle Investment Management is a multi-boutique asset manager, owning stakes in independent fund managers and then distributing their funds. Newfield Resources has a diamond project in Sierra Leone, but has not yet reached production. Lycopodium is an engineering business focusing on the mining industry. Northern Star Resources is another gold miner with key assets in Kalgoorlie, Western Australia and Alaska. And finally, Capral makes aluminium extruded profiles for buildings and transport.
So that's just a highlight of the companies that have performed well over the past decade or so, both in terms of their financials and share price appreciation.
But I'll dig even deeper than this. In the past week, I've gone through the list of 750 or so companies with market caps above US$50 million. I’ve ranked them in terms of return on equity, historical price performance and earnings per share growth. Companies with above 10% return on equity / yearly total return / EPS growth are marked with a green background colour. You can find the full list here:
3. Hidden champions of Australia
After reviewing the spreadsheet, I created a list of 25 hidden champions. I've looked for typical franchise characteristics: monopoly-like market positions with economies of scale, superior products, strong R&D, large distribution networks, strong brand names, excellent CEOs or companies sitting on rare natural resources.
Note that I've also included several US-listed Australian stocks such as Atlassian and ResMed, just for completeness.
In any case, here is the full list, ranked from the highest market cap to the lowest:
3.1. CSL
CSL (CSL AU – US$69 billion) is one of the global leaders in plasma-therapies, as well as a leader in the development of seasonal influenza vaccines.
In its plasma business, CSL collects blood from patients and then processes the plasma before selling it on to hospitals and distributors. The end product helps patients with missing antibodies fight diseases. Other parts of the plasma can be used for surgery/trauma cases where blood volume expansion is needed. CSL's subsidiary Seqirus manufactures vaccines and sells them to governments, pharmacies, hospitals, etc. CSL also has a number of speciality drugs, including iron and renal therapies, sold to infusion centres and dialysis providers.
One of the competitive advantages of CSL is having one of the largest donor networks globally. It's also built up manufacturing know-how over many decades. Its unit costs are apparently lower than those of Spanish competitor Grifols and Japanese competitor Takeda.
CSL's earnings per share has grown nicely over time, at a compound annual growth rate of +12% over the past two decades. The market itself seems to be growing in the mid- to high-single digits. CSL's earnings per share seem to have shot up further thanks to the acquisition of Vifor Pharma in 2022 for US$12 billion. And value could potentially be unlocked through the spin-off of the Seqirus vaccine business in early 2026.
Key risks for CSL include regulatory pressures, including reimbursement rates and approvals for new vaccines. There's also seasonality in CSL's vaccine business, making near-term earnings unpredictable.
3.2. Macquarie
Macquarie Group (MQG AU – US$54 billion) is an Australian investment bank that's become a global leader in managing infrastructure funds.
Its asset management division manages funds, with a particular focus on infrastructure assets such as toll roads, airports, telecom towers, data centers, etc. Its income comes from base fees, performance fees, and direct balance sheet exposure. Macquarie also trades commodities such as natural gas and crude oil. It has a corporate finance arm, which acts as an advisor and underwriter both internally and for third-party clients. It's ranked #1 in Australia but remains a niche player globally. Finally, Macquarie also has an Australian retail banking arm where it earns money through net interest income and credit card fees.
I think Macquarie's reputation as an infrastructure investor has probably helped it raise capital. It currently manages a whopping AU$1 trillion from superannuation funds and institutional investors. The funds usually carry leverage, leading one sell-side analyst to refer to Macquarie as "the house that debt built". But its own balance sheet is conservatively managed, which explains why it was able to survive the Great Financial Crisis unscathed.
The growth outlook seems decent. Macquarie recently sold Aligned Data Centers at a high valuation, and that capital will be reinvested. It has a large and growing private credit book, an asset class that has become popular among investors.
However, with leveraged funds, Macquarie certainly has exposure to the interest rate cycle as well as commodity price volatility. The investment banking business is also cyclical, as we saw between 2008 and 2015.
3.3. ResMed
ResMed (RMD US — US$39 billion) is a global leader in sleep apnea and respiratory devices. It's an Australian company that now has a large footprint, including in the United States, where its headquarters are now based.
Sleep apnea devices keep your airway open while you sleep. It's for individuals whose throats have a tendency to collapse during sleep due to obesity or other causes, allowing for better sleep and less snoring. The device itself sends pressurized air through a mask to make sure the throat stays open. ResMed also has a related app that shows your sleep quality and whether any apnea event has occurred. Over 100 million people now use ResMed products and the related app.
The company sells its products via distributors and retailers to end customers. It also sells consumables such as masks through a razor-and-blade type business model. ResMed also has a SaaS business that allows doctors to track patient sleep quality through the cloud.
ResMed's growth has been impressive over time, with a compound annual growth rate of +16% over the last two decades. Aging populations, higher obesity rates and a greater penetration rate all contribute to growth. In recent years, growth has been boosted by competitor Philips recalling a significant number of sleep apnea devices in the US after it failed to meet FDA requirements, allowing ResMed to take market share.
One risk is that GLP-1 drugs reduce obesity to such an extent that sleep apnea devices are no longer needed. There doesn't seem to have been much of an impact yet, but it remains a fear among investors. Another risk is changes to reimbursement rates for CPAP machines. However, steady growth is probably a decent base-case assumption.
3.4. Atlassian
Atlassian (TEAM US – US$39 billion) makes software for team collaboration.
Its software products include Jira for planning and tracking, Confluence for knowledge building, Trello for visual work management, Git repository management service Bitbucket and Loom for video-based collaboration. Atlassian's products are mostly on a freemium model, with monthly subscriptions for added features. Atlassian's server support ended in 2024, moving the new business entirely to the cloud. Today, subscriptions account for more than 95% of Atlassian's revenues.
Atlassian enjoys strong network effects across several of its products. Jira and Confluence have become the de facto standards for team collaboration. There's significant lock-in and ecosystem dependency for its users. Another competitive advantage is Atlassian's marketplace, which extends the functionality of its core suites through 5,700+ apps.
One question mark is whether generative AI tools will kill the SaaS industry. But I personally think that it will also allow companies like Atlassian to innovate faster and thus increase the total size of the pie.
One risk is Atlassian's stock-based compensation, as it has kept reporting negative earnings since 2017. But Atlassian's revenues have compounded at a +32% annual rate. And there's every reason to think that growth will continue.
3.5. Aristocrat Leisure
Aristocrat Leisure (ALL AU — US$26 billion) is one of the world's largest producers of slot machines, with a #1 position in North America and Australia/NZ.
Aristocrat's slot machines are sold directly to casinos or leased to them. The company also sells casino ERP systems, which include accounting, managing loyalty programs and the operational side of running a casino. More recently, Aristocrat has moved into mobile games through its subsidiary Pixel United. These casino-style games are free to play but monetized through in-app purchases. Finally, Aristocrat has websites where you can gamble with real money across poker, bingo, sports betting, etc.
The slot machine division has a huge presence in North America. And with a large installed base of slot machines, it enjoys recurring revenues. The gaming division grew through the acquisition of NeoGames in 2024 and suffers from greater competition.
In the past 20 years, Aristocrat has compounded its earnings per share at +7% annually. While there is cyclicality, it's also benefiting from secular growth in its online gambling segment. Aristocrat is also buying back shares aggressively, including AU$1.85 worth of shares in the 12 months to January 2025.
The key risks in the industry are mostly related to regulations. Products need approvals, there are typically limits on advertising, increasing the cost of customer acquisition, and gambling rules dictate what can be offered to customers and not. Another risk is that IGT and Everi have merged, potentially making them a more formidable competitor in the future. Finally, casino capex tends to be cyclical, and Aristocrat's earnings indeed dropped after the 2008 financial crisis.
3.6. Brambles
Brambles (BXB AU - US$22 billion) operates the world's largest pallet pooling network.
Manufacturing companies rent CHEP-branded pallets from Brambles. They then use these pallets to ship goods to customers. Brambles eventually retrieves the pallets, repairs them and redeploys them into the network. How do they make money? Through rental fees, surcharges to account for the cost of redeploying the pallets elsewhere and compensation for lost or damaged pallets.
There are clear network effects in the pallet pooling business. With a large network, Brambles has a high likelihood of being able to redeploy pallets close to where they end up, improving unit costs. Brambles' pallets are also integrated into customers' warehouse and logistics systems, causing some switching costs.
Brambles does have some competition regionally. For example, in the United States, PECO is a major competitor. La Palette Rouge dominates in Europe and Loscam in Asia.
Growth has been decent, though not spectacular. Brambles' earnings per share has increased by a compound annual growth rate of +5% in the past ten years. In the last year, group-wide sales grew by only +3%. M&A is a possible growth avenue. Some speculate that Brambles could eventually acquire Loscam. But nothing is on the table right now.
Most of Brambles' pallets are made out of wood. There was previously a push by some retailers, including Costco, to move towards plastic pallets, which are more expensive and would destroy Brambles' unit economics. But Costco's initiative was eventually put on hold, at least for now.
3.7. Pro Medicus
Pro Medicus (PME AU – US$20 billion) is a Melbourne-based company that's developed an imaging software called Visage.
Visage is a SaaS product that allows doctors to view a variety of scans on any device. Such scans include X-rays, CT scans, MRIs, ultrasound, mammography scans, etc.
The software is delivered over the cloud, and the payment is done via transaction-based payments, dependent on the volumes handled. Contracts with key hospitals are long-term in nature (5-10 years) with minimal churn.
The competitive advantage is partly learning based. Doctors are unlikely to switch away to competing software once they've got used to a certain software suite. The so-called DICOM scans are also archived in the software, with migrations being costly and troublesome. In Pro Medicus's key US market, it has a market share of 7-8%. The key competitor seems to be Sweden's Sectra.
The growth outlook seems decent, with FY2025 North American revenues +36% year-on-year. Management is now shifting its focus to Europe. Pro Medicus's earnings per share has risen +17% annually over the past 20 years, and it looks like growth is going to continue at a steady pace.
The key risk is its reliance on a small number of very large contracts with US hospitals. They could easily shift to similar solutions by Sectra, with the latter winning several recent tenders.
3.8. REA Group
REA Group (REA AU — US$19 billion) is the owner of property portals in Australia and beyond, with a primary focus on its website realestate.com.au.
REA also owns a number of smaller websites including Realcommercial (for commercial property) Flatmates (for shared accommodation), Mortgage Choice (for mortgage broking) and PropTrack (for property data & analytics). It previously owned a stake in Singapore's PropertyGuru, but it sold down the stake in connection with a privatization deal in 2024.
Property agents or sellers of homes go to the website to list their properties. If they pay extra, they'll get greater visibility for their listings. Agents also pay subscription fees and are able to play display ads for extra money. The data that REA collects is sold to banks, insurance companies and property agencies. Finally, REA makes money by connecting home buyers with bank lenders, earning commissions for each transaction.
The core platform has clear network effects. Just like in the case of PropertyGuru, the category leader attracts the most home buyers, and the platform with the most home buyers attracts the most property agents. In addition, the listing fees are paid by the vendors, and they tend to have deep pockets since a successful transaction can make them tens of thousands, if not hundreds of thousands, extra.
REA's growth has been impressive, with a compound annual growth rate of +24% over the past two decades. This growth has been driven by higher property prices, greater listing volumes as the industry moved online and better monetization through REA's data products.
It is a cyclical industry, however. There will come a time when sellers and real estate agents push back against high pricing. Although so far, so good.
3.9. WiseTech
Sydney-based WiseTech (WTC AU – US$18 billion) is a global leader in software for freight forwarding companies.
Its core product, CargoWise, is deployed across 24 out of the top 25 freight forwarders in the world. It's also used by customs brokers and other logistics providers. These companies use the platform to keep track of bookings, paperwork, individual containers and billing.
Customers put in orders and get quotes with prices and pick-up dates. When accepted, the quote turns into a live shipment, and bookings are made automatically with airlines or shipping companies. They then handle customs and compliance issues through the software.
99% of WiseTech's revenues are recurring, with a mix of usage fees and licensing fees. The platform is on the cloud, and payment is done periodically with a typical SaaS model.
The platform has strong network effects. Shipping carriers and governments are deeply embedded in the platform, and customers are drawn to it for that very reason. The customer attrition rate has been less than 1% over the past 13 years.
In the past ten years, the compound annual growth rate for WiseTech's earnings per share has been 31%. The forward guidance points to continued double-digit growth. CargoWise's new pricing model is going to be launched soon, and the penetration rate and monetization rates are both expected to rise with it.
In 2025, a large number of independent directors departed the company over founder Richard White's role as Executive Chairman. He's a controversial individual with a history of sexual misconduct. There are competitors to WiseTech, including transport management systems, Descartes platforms and similar platforms hosted by SAP and Oracle. But it looks like CargoWise is the leader in terms of its global market share.
3.10. Xero
Xero (XRO AU – US$17 billion) is one of the leading cloud accounting software suites in the world, with 4.4 million customers.
Xero helps small- and medium-sized enterprises with their accounting, invoice management and related services. Customers pay monthly on a subscription basis. Xero also has its own app store with add-ons, from which it collects 15% of the revenues. The most popular add-ons include connections to Amazon or Shopify stores, the no-code automation service Zapier, payroll services, tax filing services and HR management.
Once a company starts using Xero, it will most likely continue using it. The app store adds value to the customer and increases the switching costs. The software also ends up integrated with customer workflows, making it challenging to switch to a competing provider. The monthly churn rate of 1.0% is decent, though actually higher than some of its global competitors.
Xero dominates its home market of New Zealand and Australia. Elsewhere, it faces competition from Intuit and Sage/MYOB. It has been making progress in the UK but the reality is that customer acquisition costs remain higher overseas than at home. That said, Xero's earnings have grown nicely, going from heavy losses in 2023 to a 13% return on equity today.
The key risks are competition from Intuit and other software developers. There could also be pushback from Xero's recent price increases. Ten years ago, it used to cost AU$10/month and higher, and now the software starts at AU$30/month.
3.11. Computershare
Computershare (CPU AU — US$14 billion) is the world's largest transfer agent and share registrar by scale. It has a massive presence in North America.
The company's three divisions help companies in different ways:
- Issuer services: In this segment, Computershare maintains shareholder registers. If shares are sold, then Computershare helps process transfers to new owners. It also helps with lost certificates, corporate actions and proxy votes during annual general meetings. Fees are charged on a per-holder basis when it comes to maintaining shareholder registers. For each event or transaction, like an IPO or a rights issue, the company will charge a one-off fee. And it will also charge per outbound package if it needs to send communication material to shareholders.
- Corporate trust: In this segment, Computershare is a trustee for structured finance deals. It sets up corporate debt structures like CLOs, ABS, RMBS, CMBS, etc. When events happen, Computershare carries out the instructions, including paying noteholders. It also holds collateral on behalf of the owners. In return, Computershare typically earns a fee based on total assets under management. Right now, it has roughly US$6.6 trillion of assets under management.
- Employee share plans: Finally, Computershare does plan administration and acts as a trustee for employee share plans. It charges per plan and per participant and also earns interest on client cash balances. Additional revenues come from transaction fees for every grant and exercise, as well as sales or transfers of ownership, dividends, withdrawals, etc.
Computershare is currently the leader in North America, with a 57% market share among S&P 500 companies. Since the computer systems are already set up, scale has led to an operating profit margin of about 30%. And the switching costs seem to be high for its share registry and employee share plan administration services.
Growth has been decent, with a compound annual growth rate in the earnings per share of +8% over the last two decades. However, interest rates are currently high and the interest income on client cash balances would come down in case of a lower interest rate environment. Computershare is also reliant on IPO, M&A and corporate action activity, which tends to be cyclical.
3.12. Lynas Rare Earths
Lynas (LYN AU – US$13 billion) is the largest producer of rare earths outside of China, making it a scarce resource for Western buyers.
It owns the Mt Weld rare earths deposit in Western Australia, just north of Kalgoorlie. The company mines for ore, and then produces concentrate which is then separated into individual oxides at Lynas's Malaysia operations. The rare earths mined include Neodymium and Praseodymium, used to make magnets for electric motors, wind turbines and robotics.
Rare earths are not necessarily rare, but mining for them is harsh on the environment. For that reason, there's a lack of rare earth miners outside of China, making Lynas hold scarcity value. The fact that they're used for defense purposes makes Lynas a strategically important asset.
The company exited bankruptcy in 2017 and has recovered nicely with record NdPr production in late 2025. Last year, Lynas completed a mine-life extension. Earnings have also benefited from the fact that China has stopped the export of rare earths, causing global prices to skyrocket, boosting Lynas's bottom line.
The risks are mostly regulatory and environmental. Lynas's operations in Malaysia have been criticized due to fears of radioactive waste. The Malaysian license only lasts until March 2026, and it might not be renewed. There could also be changes to the current US and Japanese off-take agreements.
3.13. James Hardie
James Hardie (JHX AU — US$13 billion) is the #1 producer of fiber-cement building products globally.
Fiber-cement is used for parts of the exteriors of housing, including panels, trims, etc, but also under tiles in bathrooms and kitchens. It's durable, requires no maintenance, and has a low lifetime cost.
James Hardie started producing asbestos-cement and then transitioned to asbestos-free fiber cement from the mid-1980s onwards. Its current business is primarily focused on the US market with 11 North American plants, but it also has exposure to Australia/NZ and Europe.
Its competitive edge seems to be a national manufacturing footprint in the United States and a short lead time through a large network of distributors. It's sold directly to homeowners but also to contractors for renovations and new builds. James Hardie's North America EBIT margin of 32% suggests it's not a pure commodity product.
The company's earnings per share has compounded at a +6% annual rate in the past twenty years. In 2025, the company acquired AZEK and flagged potential cost synergies. But on the other hand, this is a cyclical industry and might suffer from the current high-interest-rate environment in the short term.
3.14. Cochlear
Cochlear (COH AU – US$12 billion) is the global leader in implantable hearing aids, with an estimated 60% market share.
The company literally invented the cochlear implant, which is used for patients with severe hearing loss. Instead of amplifying sounds, cochlear implants bypass the inner ear and directly stimulate the auditory nerve. In other words, it converts sound to electrical signals that the brain interprets as sounds.
Cochlear's revenues come from selling these cochlear implants as well as upgrades to already-existing sound-processor units. It also sells consumables such as new batteries, microphone covers, cables, etc.
Growth seems steady, though not incredible, at a +9% compound annual growth rate over the past two decades. Cochlear itself is guiding for mid-teens net profit growth in its core cochlear implant business. This earnings outlook is supported by rapidly aging populations across most of the developed world. One positive catalyst is the 2025 launch of the Necleus Nexa, marketed as the first "smart" cochlear implant with upgradeable firmware.
Competition comes from Austria's MED-EL and Advanced Bionics, owned by Switzerland's Sonova. But 12% of Cochlear's sales is spent on research & development, and it seems like it's holding up well against the competition.
The key risks seem to be regulatory, with part of the business dependent on government subsidies and support. For example, US Medicare currently reimburses 80% of the cost of hearing implants. Any reduction to that number would directly impact Cochlear's profitability.
3.15. ASX
ASX (ASX AU – US$7.3 billion) is the largest stock exchange group in Australia.
It was formed through the merger of six state exchanges, but today, all trading takes place in Sydney. Just like other exchanges, it makes money through transaction fees for cash equity products and derivatives, listing fees, sales of data and the provision of benchmark indices.
It's not a true monopoly in cash equity trading. CBOE has a 21% market share. Since October 2025, ASIC has allowed CBOE to list companies as well, opening up direct competition for the ASX. But ASX does have a monopoly in clearing and settlement for Australian equities. And ASX absolutely dominates in index futures and equity options. So while it's not a true monopoly, its market position is still strong.
ASX's growth has been decent, with earnings per share compounding at +8% per year over the last twenty years, though slower recently. And the outlook should be decent overall: Australian stocks have recently, in the past few years, and the IPO market has been revived.
The key risks are related to competition from CBOE in terms of equity trading and new listings. As well as the general cyclicality of trading volumes and the aggregate market cap.
3.16. Orica
Orica (ORI AU – US$6.6 billion) is one of the world leaders in commercial-grade explosives for the mining and related industries.
Its explosives and electronic detonators are sold to mining companies worldwide to break up ore bodies and then extract metals from them. It also has a related software called BlastIQ that uses orebody data to design and execute explosions for the best result. Orica's engineers drive to each site via "Mobile Manufacturing Units" and help customers prepare for the blast. Finally, Orica sells mining chemicals, in particular sodium cyanide, which is used to extract gold from ore.
Orica's chemicals are produced in-house. Orica also has a large service fleet with these Mobile Manufacturing Units. Its main regional coverage includes Australia, Canada, Indonesia, Peru, Brazil, as well as parts of the United States.
The industry is cyclical, however. Earnings have hardly moved in the past twenty years, but that's after a cyclical bear market in industrial commodities. Orica's revenues are up roughly 50%. The mining chemicals unit should benefit from the recent spike in gold prices, at the very least.
3.17. Codan
Codan (CDA US — US$3.9 billion) is an Adelaide-based electronics company dominating the global market for gold and other types of metal detectors. Its metal detectors are sold under the Minelab brand name and cost about US$1,000 each. Customers include hobbyists, but also artisanal gold miners.
Codan also has a defense business, where it provides communications equipment used in extreme environments. This equipment includes high-frequency radio devices used by militaries to communicate on land, sea, and in the air. Encryption enables the safe transmission of data. The equipment is not only used by militaries, but also by oil & gas companies, ambulances, mining control rooms, etc.
Codan reinvests 8-10% of its revenues into new products. Upgrading to the latest metal detector seems to be the best way to beat your competitor in detecting gold nuggets that are sometimes too small and too far below the ground to be discovered. Within the defense segment, getting approvals is a major hurdle across both Australia and the United States.
Management is now targeting growth of 10-15% per year. The guidance for FY2026 is even higher thanks to general defense tailwinds. Codan has several new Minelab metal detector products coming, including the Gold Monster 2,000. In the last 20 years, Codan's earnings per share has grown at a +9% annual rate, and there's every reason to think that this growth will continue.
One risk is that the previous CEO, Donald McGurk, quit in 2021, after leading the company for almost 12 years with great success. It's unclear whether his successor, Alf Ianniello, can live up to the high expectations set by McGurk. It's also a fact that the gold detector market is cyclical and would suffer in the case of a weaker gold price.
For the record, I wrote about Codan in 2022 here:
Michael Fritzell
3.18. Treasury Wine Estates
Treasury Wine Estates (TWE AU – US$3.3 billion) is the owner of the Penfolds, as well as a number of niche other wine brands such as DAOU, BV, Frank Family, etc.
The company owns 10,000 hectares of vineyards in Australia, New Zealand, California and Europe. But the key base is Australia, especially in Southern Victoria and New South Wales and the Margaret River region.
Other than the hard-to-replicate assets and some iconic brand names such as Penfolds, it also enjoys the benefit of a global distribution system. It's been able to acquire vineyards on the cheap and then plug them into the distribution network to better monetize them.
The company suffered from 2020 to 2024, when Australian wines were subject to high import tariffs from Mainland China. However, Penfolds hasn't fully recovered yet, with some continued weakness in Mainland China. Given that it's a capital-intensive business, TWE is certainly not a compounder. But in the past 14 years, it's at least compounded the earnings per share at an +8% annual rate.
The main risk is renewed Chinese tariffs on Australian wines. It's also a cyclical business, with droughts affecting yields in some years. Some also worry that Generation Z will consume alcohol in lower quantities than older generations. But then again, wine is generally seen as a healthier alternative to other types of alcohol.
3.19. Ansell
Ansell (ANN AU – US$3.1 billion) is a world leader in hand protection and other types of personal protective equipment.
It sells products across two segments:
- Healthcare: surgical gloves, exam gloves and cleanroom gloves
- Industrial: chemical protective gloves and garments
The products are sold using a variety of brand names, including TouchNTuff, HyFlex, AlphaTec, Kimtech and KleenGuard. The gloves and PPE are sold via distributors and directly to its larger customers.
Just like for Riverstone, Ansell's niche is high-spec protection, including for semiconductor and chemical industries. Its direct contact with customers enables it to offer greater service levels than many of its Malaysian and Chinese competitors. High standard levels in these industries make it hard for these competitors to grab market share.
Growth has been uneven, with a slowdown in growth post-2015, partly due to new competition from China. COVID-19 was a boon to the industry. We're in a temporary oversupply of PPE and disposable gloves. Earnings per share have been almost flat over the past 20 years.
Nonetheless, Ansell remains a global leader, especially in its heavy-duty industrial/surgical/chemical protective glove niches. Its market share is 18%, and roughly 10 million workers use its brands daily. The 2024 acquisition of Kimberly-Clark's PPE division cements Ansell's leadership further.
3.20. Breville
Breville (BRG AU – US$2.7 billion) is one of the largest makers of coffee machines globally.
The company focuses on kitchen appliances under the Breville and Sage brand names. These include not just coffee machines but also grinders, air fryers, microwaves, smart ovens, blending machines, rice cookers and tea kettles. It also makes capsule machines for Nespresso under the Creatista brand name.
Breville's products are sold worldwide, with North America being the largest market. They are typically sold through retail partners, but Breville also has a direct-to-consumer e-commerce business that makes close to US$100 million per year.
Growth has come from a higher penetration rate of at-home speciality coffee machines. The earnings per share has grown at a +11% compound annual growth rate over the past two decades. Breville has also engaged in M&A, including the acquisition of US coffee grinder maker Baratza in 2020, as well as Italy's LELIT in 2022.
One major risk is US tariffs on Chinese products. Breville has moved away from manufacturing in Mainland China towards Mexico and Southeast Asia, but this shift will take years to play out. There's also intense competition from Jura, De'Longhi and newer competitors such as SharkNinja. Consumers have many options. But Breville has certainly performed well so far.
3.21. Catapult
Catapult (CAT AU – US$1.3 billion) is a world leader in sports technology for elite athletes. 17% of pro teams globally use its hardware and software, close to 5,000 in absolute numbers.
The company makes money by selling multi-year subscriptions to its software platform, one for each team. It then places wearables on athletes to track how fast and where they move, speed, the workload, the intensity of training, etc. All to help teams train better and avoid injuries and overloading. It also helps teams keep the right players on the field and execute tactics better.
Catapult's edge is clearly its technology, including proprietary sensors and its ClearSky local-positioning system. There are also switching costs, at least in terms of learning new software and getting it implemented on a day-to-day basis.
Catapult is still loss-making, but revenues have grown at a +26% compound annual growth rate over the past decade. The sports analytics market is growing at a high 20s annual growth rate, and these tools are becoming more commonplace. Catapult's Vector 8 software could be another catalyst. It apparently offers better live analytics and promises improved efficiency.
The key risks seem to be cyclicality in club and league budgets, which themselves are reliant on advertising. There is competition from the likes of STATSports, Kinexon and Hudl, though it's hard to estimate their exact market shares.
3.22. IDP Education
IDP Education (IEL AU - US$1.2 billion) is the global leader in international student placements. It's a part-shareholder of IELTS, the biggest English test globally, with more than 2,000 test locations globally.
In the core student placement business, IDP helps US, Canadian, Australian, and UK universities recruit international students. These universities pay IDP placement fees upon successful recruitment, with students themselves paying almost nothing. In the English language test business, IELTS organizes English exams used for immigration or university entrance applications. I believe that test takers pay for the exams themselves. Finally, IDP has its own language schools, where it charges tuition directly from students.
Because of its partnerships with most of the large universities, IDP has a decent reputation. It has the highest visa acceptance rate among any of the larger student placement agencies, which many universities consider critical for attracting the best students. And IELTS has a strong brand name with universities, making it crucial for students to take the exam.
IDP has grown nicely over time, at a +17% compound annual growth rate in the nine years to FY2024. However, tightened visa requirements across Australia, the UK, Canada, and the US have reduced placement and IELTS test volumes. Revenues came down significantly in FY2025, about -14% and earnings fell even more.
However, you could also make an argument that while geopolitical tensions now exist between certain nations, e.g. India and Canada or the US and China, students might go elsewhere eventually. The demand for overseas studies probably remains.
3.23. Nanosonic
Nanosonic (NAN AU — US$913 million) is a Sydney-based company dominating the global market for disinfecting ultrasound probes.
Its key product is called "trophon", and uses hydrogen-peroxide cartridges for disinfection. What they disinfect are ultrasound probes that are either inserted into the body or used on the skin to send ultrasound into the body and create images. Each time an ultrasound probe is used, the gel is wiped off and the probe is then placed in a trophon's sealed chamber for 7 minutes for complete disinfection.
Nanosonic sells these disinfection machines to hospitals, and they then pay extra for consumables in the form of hydrogen-peroxide cartridges. The recurring consumables revenues now represent 74% of the total. There's also a smaller software business with analytics, but the revenue from this is not material.
Growth has been decent, with the top-line increasing at a +25% compound annual growth rate in the past ten years, and with improving profitability. In 2024, Nanosonic also received FDA clearance for the next-generation trophon product, which should support replacement demand. It's also awaiting approval for a new endoscope cleaning platform that could create an entirely new line of revenue for the company.
Nanosonic is reliant on a single product, however, and there is competition from Tristel, Germitec and several other companies. It also has a high reliance on the US market where it has a market share above 50%. In the US, it's been reliant on distribution by GE, and the transition to direct distribution could add risks.
3.24. Jumbo Interactive
Jumbo Interactive (JIN AU — US$491 million) is an operator of online lotteries in Australia.
The company sells official lottery tickets on the website OzLotteries and Jumbo's app. Jumbo then earns a 4.65% commission from The Lottery Corporation and a service fee from the customer. The website has over a million active players. Jumbo's contract runs to 2030, and it has no competition before then.
In addition, Jumbo owns a Lottery software platform that it sells to other lotteries and charities to run their own online sales. It's structured as a SaaS product with monthly subscription fees and usage-based fees on top of it. It also runs charity and society lotteries end-to-end in the UK and Canada.
Jumbo's earnings per share has compounded at a +18% annual growth rate over the past two decades. Growth is pushed by the move online by the lottery industry, with the current penetration rate barely 40%. The client base for the Jumbo Lottery SaaS platform is also expanding gradually, with RSL Queensland joining in September 2025.
The key risk is the reliance on The Lottery Corporation, including the renewal risk and compression in terms of the commission earned. TLC could one day bring its operations in-house. There's also cyclicality in the jackpot timing and the jackpot size from year to year.
3.25. Seeing Machines
Seeing Machines (SEE LN – US$231 million) is one of the world leaders in camera-based Driver Monitoring Systems. It's based in Canberra, Australia but listed in London.
The main system serves as an early warning signal, alerting drivers whenever there are signs of fatigue or distraction that could lead to traffic accidents. It sells both integrated driver management systems for new vehicles as well as an aftermarket product called the Guardian box that's used to detect driver fatigue. These cost about US$1,000 each.
There are currently 3.7 million cars using Seeing Machines' technology. Growth is likely to come from new EU mandates requiring all new vehicles to include an advanced driver distraction warning system from 2026 onwards. And to get top safety rankings, automakers are incentivized to buy the latest and greatest driver monitoring systems.
There is competition from the likes of Mobileye, SmartEye, Harman/Cipia and Tobii. In particular, Mobileye's EyeQ seems like a tough competitor. They've just released a camera-based driver management system that will compete directly with Seeing Machines.
It's also worth noting that Seeing Machines is still loss-making. Historically, losses have forced the company to dilute shareholders through regular equity issuance. But management is guiding FY2026 to be cash flow positive and for revenue to be higher than US$125 million. So perhaps the company is finally turning profitable.
Conclusion
This has been my attempt to identify the top 25 hidden champions in Australia. It's obviously a tough challenge, given the large number of high-quality businesses in Australia.
In this attempt, I paid zero attention to share prices. So I'm well aware that many of these companies trade at high valuation multiples. The purpose of this post is to learn about the opportunity set.
In the near term, I am interested in diving deeper into several of these companies, including Treasury Wine Estates and IDP Education. So stay tuned for that.
