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I spent the last week in Western Australia on a short holiday. I didn’t meet any companies while there, but I thought I should still share some thoughts with you about the trip.
Table of contents
1. A trip down south from Perth
2. The investable universe of stocks
3. Five highlighted stocks
4. Conclusion
1. A trip down south from Perth
We arrived in Perth last Monday. It’s the capital of the state of Western Australia and the city where most of Australia’s mining firms are based.
Perth was one of the original colonies in Australia, but it initially failed to gain popularity due to the inhospitable environment. It can get hot. When we arrived, the temperature was 43 degrees Celsius (109 degrees Fahrenheit).
In Perth, we rented a car and drove down to the area around Margaret River - a sleepy town that’s become the center of a burgeoning wine district.
Around Margaret River, we explored some of the wineries. The first one was established in 1967, and today, there are over 200 wineries in the region. The climate is similar to California, and similar grape varieties are used here. And Margaret River has been a success - while only 3% of Australia’s wine is produced in the region, 20% of the country’s premium wines come from here.
We also visited several beaches from Busselton to Dunsborough, Eagle Bay and down south to Gnaraup. Absolutely beautiful, with some of the whitest sand I’ve ever seen.
Another observation is that there were hardly any people around. The region is sparsely populated.
Which brings me to my next observation. That we’re going to see significant population growth in the Southwestern part of Australia in the next few decades and centuries. Western Australia has a population of just 2.7 million people, and the vast majority of those live in Perth. Compare that to Asia’s 4 billion population.
We met several foreign workers who said they dreamed of becoming Australian citizens. They love the weather, the beautiful nature, and the fact that people speak an easy-to-learn language. And while property prices are high, at least people can buy freehold properties and use them to build household equity.
Another surprise is that Western Australia’s average GDP per capita is US$90,000 per year. Western Australians are as wealthy as Norwegians. And you can tell that residents are living comfortably.
Australia uses a point system for immigration, prioritizing skilled immigrants and those who are likely to integrate well into Australian society. This system seems to have helped Australia attract individuals who play by the rules.
Tourism will be more challenging to develop. We were told that a direct 5-6 hour flight from Singapore to Busselton Margaret River Airport will be available from late 2024 onwards. That will help bring in Singaporeans. But for the rest of the world, Western Australia is a remote location that might not be worth spending tens of hours travelling to. It’s a shame because it’s a fantastic place to visit.
2. The investable universe of stocks
Most of Western Australia’s 172 publicly listed companies above US$50 million market cap are either junior miners or services companies. But there are a few exceptions.
I hoped to find tourism-related companies or cheap consumer businesses that will likely grow with the population. But unfortunately, they are few and far between.
In any case, let’s dig in. Here is the full sample of publicly listed stocks with headquarters in Western Australia:
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