Basics: How Do I Find A Good Company?

Alec: [00:01:37] here we are back for another episode [00:01:38][1.2]

Bryce: [00:01:40] Fresh off an interview with Paul Bennetts, [00:01:41][1.4]

Alec: [00:01:42] the CEO of Spaceship Super, [00:01:44][1.8]

Bryce: [00:01:45] which will be releasing very shortly. So stay tuned for that. [00:01:48][2.9]

Alec: [00:01:48] So what are we going to do with this episode? [00:01:49][1.3]

Bryce: [00:01:51] So episode seven, we will cover some news, as always, kind to bring you basic one or one where we're going to answer the question, where do we find information about the stocks that we buy? We've had some feedback from some of our listeners who want to know what's the best way for them to find information about stocks on the market. [00:02:09][18.6]

Alec: [00:02:10] Yeah. So if you do have questions that you want to answer, keep sending them in. We'll happily go through and try to answer them as best we can. [00:02:16][6.8]

Bryce: [00:02:17] Yeah. And then we'll finish with as our Stock of the Week started going on a little. Do you want to line up for you that we think is going to do pretty well? [00:02:25][7.6]

Alec: [00:02:26] Yeah. All right. Well, I just want to talk about [00:02:28][2.8]

Bryce: [00:02:29] the Stock of the week. If you haven't been paying attention to some of the stocks that we've been talking about, Gateway Lifestyle Group, which was our first stock of the week, actually had some good movement this week because they announced that they were going to be purchasing another facility to add to their portfolio. Facilities are dropping out. Let's have a look at our portfolio. You can say that we have to include. Yeah, and it's just a good indication that our thesis is paying dividends right now. [00:02:57][28.9]

Alec: [00:02:58] It's still it's still early days. So let's not let's look at something else to say. Yeah. All right. Well, without any further dirt, let's get into the news. So first bit of news, we recently saw that Australia is going to cut the company tax rate, so the Australian company tax rate at the moment is 30 per cent. And what the government is doing is dropping it to 25 percent for companies with less than 50, Dollars million in revenue now due to the quirks of the Australian parliamentary system. It's passed the Senate. And so everyone knows it's going to come into law, but it's not actually going to be officially passed until the budget when parliament sits again and it gets passed through the House of Reps. [00:03:44][46.7]

Bryce: [00:03:45] Sorry, Ren is briefly cutting company tax. Does that mean for someone who's dying on or someone who's just broken? [00:03:50][5.5]

Alec: [00:03:51] Well, essentially what it means is that, as the name suggests, companies will pay less tax on the profits they make. So if if you are investing in a company that has less than 50 million dollars revenue, it will only be paying 25 percent of their profits in tax rather than 30 percent. Now, the interesting thing to watch is it's only for companies that have 50 million dollars revenue or less. So what we might say is some, you know, some accounting tricks. Some companies spin off companies into fully owned subsidiaries and stuff like that to get themselves under the 50 Dollars million revenue threshold because saving five percent on tax is pretty big. So a lot of companies are going to try and do what they can to get under that 50, Dollars million revenue. So something to watch, to see how tax avoidance takes advantage of this new tax policy. [00:04:39][47.8]

Bryce: [00:04:40] Stephanie, with news out of the way that with that pretty interesting insight I posted on our Facebook page is that Tesla has now passed four in terms of market valuation. [00:04:49][9.3]

Alec: [00:04:50] So why don't we explain what Moqbel market valuation [00:04:52][2.0]

Bryce: [00:04:53] is, the price of your company's shares times by the number of shares that are on the market, and that gives you a total valuation at market level. Yeah, and [00:05:03][10.7]

Alec: [00:05:04] so very simply, if we own a company and our shares are trading at one point and there's 100 shares out in the market, our market value, or you sometimes can hear it called market cap is one hundred dollars. [00:05:14][10.4]

Bryce: [00:05:15] So for the first time in the history of both companies, obviously Ford is a lot older than Tesla, but for the first time or in market value. Now, everything about it is that it's an indication of the way that investors are starting to look at the automotive industry. And also, it's a great example of disruptive technologies and companies coming in and changing the way that these industries that have long been steadfast in their ways are now trying. [00:05:44][29.3]

Alec: [00:05:45] Yeah, and people invest for the future. So something like this is general indication of where the market thinks the future of automotive is like. Yeah. And then one final piece of news. Trump recently hosted Xie Jinping at his is the Chinese leader. Trump recently had him down to his resort in Florida. They played a bit of golf chat over some issues. Both said it was a good meeting, but they generally always, always say it's a good meeting. But just it's an interesting place to watch. Given how vicious some of Trump's Ren rhetoric was during the campaign. You know, calling China a currency manipulator is saying they've screwed America on trade, saying they get it. Now, Trump said he was going to screw China and bring manufacturing back. So it's interesting to say how that relationship develops. It's got implications for Australia in terms of free trade and what American what way. So because America and China are the biggest economies in the world, they generally set the rules and set the direction for trade. So if China and America start engaging in a trade war and start putting up tariffs and trade barriers, what you'll probably say is a lot of other countries following suit because you don't want to get left behind and, you know, be the only countries open to free trade while every other country is putting up huge protectionist measures. So as Australian investors, we obviously are quite small market compared to the world. We benefit greatly from free trade, both with America and China. And so fingers crossed, this this meeting and future meetings they have is good news for free trade. And in that way, it's good news for Australia. [00:07:18][93.5]

Bryce: [00:07:19] That wraps up our news for the week. So moving on, this is basically one on one each episode. We will try and bring you some interesting topics. And as we said at the start of the show, today is where to find information on stocks and companies and how and how we find information. Yeah, yeah. Because it's a valid thing to raise because there are many, many ways in which we find information about stocks. Yeah, there's a lot of opinions out there. And so it's about refining the way that you do it and more about what's there, being aware of what you're reading so that you can be in stock to train yourself to look for opportunities. [00:08:01][42.4]

Alec: [00:08:02] Yeah. And make sure it's not fake news. [00:08:03][1.3]

Bryce: [00:08:05] So we go through a bit of a list, obviously. First on the list is Equity Mates. [00:08:09][4.1]

Alec: [00:08:11] I mean, if you own are you going to get news and get investing advice from one place, there's no better place to buy it at all. [00:08:19][7.4]

Bryce: [00:08:20] All jokes aside, I think the first the best place to start thinking about where you can get for information is to think about, firstly, where your interests lie in terms of companies or industries. And this can stand from experience that you've had for working for companies or the industry that you work in or that you know, your friends or family might work in. And that can start to help you understand the industry a little bit better than if you had no experience with [00:08:48][28.3]

Alec: [00:08:48] it at all. Yeah, definitely. And it doesn't have to be you know, you don't have to be working in the head office of the company if you work in retail or if you work in hospitality. Your experiences are like valuable experiences for your investing knowledge. Think about what companies are doing well in your industry, what you know you've done well in terms of selling things, and then think about like what companies are doing that on [00:09:08][19.8]

Bryce: [00:09:08] a mass scale. So a good example might be that you work for Harvey Norman on after school, on a week night or during university or whatever, and you look around Harvey Norman and see that as a particular brand of vacuum cleaner that is selling really well. And that could be a trigger point for the use of anything. Okay, well, let me say something good about those products. Let's research this company that was listed as a public company and then that would venture further. Yeah, yeah. So that's probably one of the best ways to start is just to look around in your surroundings and how to think about, you know, where your interests lie or if you have experience with any industry. [00:09:47][39.3]

Alec: [00:09:48] And yeah, now obviously you want to have experience with every industry. So you need some really good sources of information. And the best one for my mind is the one that I always go to first is Australian Financial Review. It's a newspaper. It's got an it's an online newspaper as well. A lot of good articles on Australian companies and the Australian market. It's a newspaper. The target market is investors. So it's always a good first source of information to know what's going on in the market. And you know what you need to know. [00:10:19][31.2]

Bryce: [00:10:19] I would suggest buying the weekend paper. Yeah, well, the Australian Financial Review summarises the week pretty well and also have some statements in there that was actually in that sorry about specifically targeted towards markets and companies and also to invest the money and otherwise Afterpay during the week. Yeah, he's got 350 thereabouts on the weekend. And yeah, I, I said, yeah, it should be a first stop. It's, it's fantastic. Yeah. [00:10:46][26.7]

Alec: [00:10:46] But you know, not everyone wants to pay for information and in the age of the Internet only stuff is paid for information. So yeah. So look, there's a bunch of free resources as well. The first is just, you know, the general TV news at night and newspapers, you know, online news sites that you go to. There's generally some information on companies in the markets, but also just more general information. You know, if you know free trade deals happening, that's going to have implications for the market or the company tax rate. That's changes. That's going to have implications for the market. So just general things in the reported in the news have implications for different companies and for the market as a whole. And it's important to sort of just, you know, keep writing and think about how whatever changes in society and in the economy are going to affect the different companies. [00:11:31][44.2]

Bryce: [00:11:31] Yeah, I think that's a very good point. This is all about the financial resources available and it's gone through the Australian Financial Review and all that sort of stuff. But if you don't have a conscious effort looking for things that might be creating opportunity for companies, then you're wasting your time. All you're doing is trying to start to look for opportunities that are the macro opportunities, changes in government legislation, and then think about how that may affect companies. That sort of stuff is what you need to be looking for. [00:12:02][31.3]

Alec: [00:12:03] Yeah, yeah, yeah. Even things like, you know, trends in, you know, trends in food and clothing, like clothing and stuff like that, not as a direct effect on what companies are going to do. Well. And, you know, so you just got to like literally everything that's going on in society. You can think about how that will affect certain companies because there will always be an effect. That's just the nature of the world that we live in. So anything that you're interested in, there will be companies that are affected by things [00:12:27][24.8]

Bryce: [00:12:28] like weather, disasters, like the cyclones and floods that we've been having a huge impact on retail [00:12:34][5.9]

Alec: [00:12:34] stuff. Yeah, insurance [00:12:35][0.6]

Bryce: [00:12:36] companies have got the shock jock for a while. That's going to impact on their ability to generate revenue, that sort of stuff. So stop thinking about everything around you that's happening is going to have an effect on the company if they about you trying to join the dots as to what effect that's going to having and then trying to find companies that will be affected. [00:12:52][16.7]

Alec: [00:12:53] Yeah. Now there's a bunch of specific financial information that you can get and one that's really valuable and everyone should take advantage of is the information that companies send out themselves. So any publicly listed company in Australia will have to publish an annual report which will. Detail all their results for the last year, what their plans for the future are, and then around that they make a whole bunch of announcements to the market and they do a whole bunch of interim report, toffy report, stuff like that. All of that is publicly available either on their website or on his website. And, you know, obviously, companies are producing this information. So if they've had a shocker of the year, they're going to try and sugarcoat it. But just to get that information about all about all the aspects of the company and how they're going, really useful results and definitely something you should read before you invest in a company. [00:13:43][50.0]

Bryce: [00:13:44] Some of can be quite happy to start even if you don't read the whole thing. A lot of them out there. Yeah. It's just a good a good way of getting an understanding of what information comes through the reports as you progress. And you can get a bit more experience and interesting investing that you can. But certainly try and read this, obviously, once you find the company that you're interested. You certainly read the executive summary somewhere where you can get a little bit of additional information. [00:14:10][26.3]

Alec: [00:14:11] Yeah. [00:14:11][0.0]

Bryce: [00:14:13] In terms of online sites, Google and Yahoo! Both have pretty comprehensive financial regulation available. Very easy to read, very easy to understand. And, you know, that's and so all in [00:14:28][14.9]

Alec: [00:14:29] all, the company reports and stuff will be linked to on Google Yahoo! Finance, you can have a look at the charts and see how the share price has moved on. A bunch of the key financial metrics, you know, price to earnings ratio, net tangible assets per share, stuff like that. You can see if you're not sure any of those terms mean, check out a glossary, Equity Mates dot com. [00:14:49][19.8]

Bryce: [00:14:50] So, yeah, and went out to a billion devices where you can go once you found these companies that you're interested in. Social media is a fantastic way of also getting an idea of what's trending at the moment or in the news. And in terms of the stuff, Twitter is very good at highlighting what's what's hot at the moment. [00:15:10][20.1]

Alec: [00:15:10] The investors love to share the information on Twitter as well. Yeah, it's just I guess it's the nature of the game. Like if you make an investment, it's good that other people know about it and also make that investment. [00:15:20][9.9]

Bryce: [00:15:21] So a lot of investors also, I can give you is fantastic for us because we can see both sides of the argument and sort of make an idea out of the company. But the truth is, quite a lot of the big investors are on Twitter. Love sharing. Yeah, yeah, yeah. That's a fantastic way of getting a quick overview of what's hot, what's not getting access to investors [00:15:43][22.5]

Alec: [00:15:44] without having to pay for any information. We're going to do as well is if you jump on our website, Equity Mates dot com or jump on our Facebook or Twitter, we'll compile a bit of a blog post about some of the big people you should follow on Twitter. So if you're just getting started and you have a Twitter account, that's that's a great way of just getting a whole bunch of experts giving you information. So you check out Equity Mates dot com to get that list. [00:16:09][25.9]

Bryce: [00:18:05] There's also no forums that are available online where a lot of people like us and. Jump on and share that, because some of us you've got to know what you know, you've got to [00:18:18][12.8]

Alec: [00:18:18] know you've got to take it with a grain of salt. [00:18:20][1.3]

Bryce: [00:18:20] A lot of people getting on the air and talking about all of the [00:18:24][3.8]

Alec: [00:18:26] anonymous forums are a bit a bit dangerous. But I mean, it's all it's one of those things. You know, it's a good starting point. If you're going to do your own research afterwards, it's a good place to get some ideas. [00:18:34][8.7]

Bryce: [00:18:35] So someone that somebody might want to check out about and the Motley Fool, Motley Fool you have to pay for. Yeah, but I think maybe what we we [00:18:47][12.5]

Alec: [00:18:48] don't have or don't stop you [00:18:50][2.1]

Bryce: [00:18:51] there Afterpay like that. I certainly like and Ren as well is read a fantastic online community if you don't know. [00:18:59][8.4]

Alec: [00:19:00] Yeah. Even if even if you don't know about Ren and you don't use it for investing, getting ready [00:19:03][3.7]

Bryce: [00:19:04] to try a massive community of everyone online posting about everything. But there's a number of sites that you should check out specifically on finance and stocks, both not related to Australia. [00:19:20][16.6]

Alec: [00:19:21] Yeah, there's also ah ASX, which is related to Australian investing as well. [00:19:25][4.7]

Bryce: [00:19:26] And these are forums where people go on and just chat about anything to do with that topic. So it's a fantastic place. People ask questions, they give advice on what started out as a hypothetical portfolio. So they're very similar to ours. People podcast. OK, so that's it's a great way to get a whole bunch of information in one place. [00:19:48][22.0]

Alec: [00:19:48] And then there's also a bunch of subjects that aren't particularly focussed on Australia, but then on global communities. But right. Great resources. There's all sorts of investing, slash business slash economy, slash personal finance. They're all really, really great resources, not just for investing, but just for the personal financial decisions and habits more generally that they graduate. [00:20:11][22.5]

Bryce: [00:20:11] So he's definitely got to hear you talk about any of those buzzwords that we just mentioned. And there won't be a lot of things that come up. So, yeah, fantastic resource. I highly recommend jumping on there. But at the end of the day, the main thing is to remember we are in research. Yes. I think that whenever any of these forums or social media or newspapers anything is set in star and gold, you know, you've still got to come to the conclusion. As you said, everybody comes here with fantastic resources to help you come to that conclusion. [00:20:45][33.6]

Alec: [00:20:46] Yeah, definitely. I just want to make one point. A lot of a lot of new investors will go to a broker broker recommendations. So companies like Morningstar will put out reports to the market. You know, we recommend buying Commonwealth Bank or we recommend selling, you know, Company X. They're great. And look, these guys are experts are professionals who are writing these reports. So they're definitely worth writing and saying why they're recommending them. But as a little bit of questions over conflicts of interest and misaligned incentives in writing these reports. So even if you're rating brokerage reports on companies, don't just take that as gospel. Always do your own research on top of that and really question the conclusion they're making because the incentives are a bit misaligned in what they're doing. [00:21:29][43.8]

Bryce: [00:21:30] A better job on the Australian Financial Review dot com right now. Yep. And onto that page and say, well, headline is it and say if we can come up with not necessarily a stock, but we can come up with something of interest, and then that might lead us to [00:21:46][15.6]

Alec: [00:21:46] try and relate it to the companies that might industries that might do well because of that news story and might suffer because of that new start to take away. All right. So I'll just jump on that for now. All right. So here you guys. Right. What about the U.S. sending Armada to North Korea? So interesting. So this is this is a nautical. Donald Trump has said he wants to send an armada of U.S. Navy ships to the Korean Peninsula, given that ongoing tensions with North Korea. OK, so this has been in the news a bit lately. And obviously it's primarily a foreign policy story. But as we were saying before, everything has implications for the market, literally everything. We'll start with what companies will benefit. So obviously more the U.S.. Yeah, but look, there are implications for Australia as well. So the big winners out of any military escalation is U.S. defence contractors. And there are a bunch obviously they're trading in America. The biggest one that most people would have thought of is Lockheed Martin. But there are a bunch of others. Just to give you an idea of how lucrative war can be for those defence contractors, Raytheon was there is a defence contractor that makes Tomahawk missiles and that President Trump recently launched 59 Tomahawk missiles into Syria to blow up this air base, which I'm sure everyone has heard about. What people probably didn't hear about is that these cruise missiles cost almost a million dollars. And right Raytheon now has to produce more for the U.S. military. And when President Trump fired those cruise missiles, Raytheon's share price jumped four Dollars straight away on the news. I went from about 150 Dollars 154 to Oscar. And that's just because defence spending is such a big part of America's budget and everything that is created is so expensive that any time any military equipment is used and has to be replaced, there's big dollars in it for defence contractors. So a big win out of Trump sending an armada to North Korea and escalating military tensions is defence contractors. Even though nothing [00:23:44][117.9]

Bryce: [00:23:44] is Congress yet. It's a possibility. [00:23:46][1.6]

Alec: [00:23:46] It's a possibility. Yeah. And even if even if a shot is never fired, increase military tensions lead to increased worry in Washington about potential military conflict, and that leads to increased military spending. So you don't even need a war. All you need is fear, essentially. And that's what defence contractors live on. All right. So a loser and there are big losers out of this. Obviously, the biggest loser is the North Korean people. But in terms of investors, Australia, Australian companies are pretty big losers because as military tensions escalate between America and North Korea, North Korea's biggest ally, China is going to get edgy and not and the relationship, the Chinese American relationship is going to sell. That's really bad for Australian companies that export focus and especially the export to China, because if anything ever does kick off between America and China, all these Australian exporters all of a sudden aren't going to be able to export to their biggest market. So that's companies like Bellamy's H.M. Blackmore's Treasury Wine Estates and a bunch of others that now make a huge chunk of their income from selling to the Chinese market. They're going to suffer. So they've got a story about a war that has been investing in protections often. [00:24:56][69.2]

Bryce: [00:24:56] All right. Well, what are you writing on about? I had to scroll through the front page of the paper and I caught my attention was diverted. Page Spectrum's Scarers, Telstra investors. Now, today, this is a fantastic headline because also automatically it major companies that I can do all those things and take Telstra and what their message is going to go. It goes on to say that they are going to today, the telecommunications company is about to spend one point two billion dollars. So what does this mean? What are the pros and cons? Pros are the fact that technology is investing in infrastructure spending, which is going to create greater competition, which is pricing protections for consumers and also potentially positive implications for their shareholders. So the losers are obviously Telstra. They're going to be the major losers because if it goes according to plan for they're going to be losing customers, it's going to be greater competition for them. They're going to have to come up with ways of reducing costs for all. And they want to increase their losses, which is going to be another negative for their customers. So the losers would be Telstra. So you would then go away and look at its companies individually and think about what might be than that. [00:26:18][82.2]

Alec: [00:26:19] And Telstra's share price did drop on the news of this investment. So, you know, if you don't think if you reckon that this investment by technology is going to fail now, maybe a good time to buy Telstra. But clearly, investors are a bit worried about technology and what they're going to do for Telstra's mobile customers. [00:26:36][17.0]

Bryce: [00:26:36] Yeah, so there are three ways that you just quickly browse the Internet and come up with some potential companies. Are you sure? Yeah. Awesome. So moving on, as always, again, the stock of the way. Everybody was so worried about this. [00:26:55][18.6]

Alec: [00:26:56] We've talked about this before on the show that we are both really interested in Australian agriculture as an industry, as a sector in the Australian economy. We think it has a lot of potential. [00:27:04][8.9]

Bryce: [00:27:05] Well. [00:27:05][0.0]

Alec: [00:27:07] Yeah. What we've seen recently is a lot of extremely wealthy Australians move quite heavily into agriculture. So Kerry Stokes, the owner of Seven West, has put a lot of money in Gerry Harvey of Harvey, Harvey Norman and a lot of money. And Gina Rinehart has just built a Lagu beef export business based up in the Top End in Northern Territory, Queensland. So and there's a bunch of others. The long and the short of it is there's a lot of money flowing into Australian agriculture at the moment, [00:27:38][30.5]

Bryce: [00:27:39] which is a positive sign. [00:27:39][0.7]

Alec: [00:27:40] Well, yeah, especially yeah. If you're a shareholder in the industry. Yeah. And there are some. There are some. Yeah. Or a farmer. There are some particular areas in the agriculture industry that have done particularly well out of this and that investors think a good long term prospects, one that we've talked to. It's not so much that we all know that one, not one that we've talked to death about is dairy. So we're not going to talk about that anymore. But there's a bunch of others that people think have quite good long term prospects. The main thing, the main theory is. A lot of these industries will benefit from opening up of Asian markets and the emerging Asian middle class and will be able to export to these markets. [00:28:18][38.1]

Bryce: [00:28:19] And we are starting to see this as demand from particularly China is really starting to fuel its agricultural development. And the growth is coming from what we say in Ukrainian products. Yeah, and, you know, the mindset of the Chinese at the moment is that they are becoming more wealthy. They want to enjoy the finer things or the way in Western society. Suffice it to say no. And that's why the [00:28:50][31.9]

Alec: [00:28:51] whole debate [00:28:51][0.2]

Bryce: [00:28:53] started with those sort of products that are at the moment really reaping the rewards of a growing Asian middle class. [00:28:58][5.8]

Alec: [00:28:59] So one industry that we particularly think has a lot of prospects is the Australian beef industry. And there are a variety of reasons for that. Australian beef has always been quite sought after, especially Australian walker beef has always been very sought after item in Asia. But what we've seen recently is that while while you beef has continued to be very strong, just Australian beef in general has been a very strong start to China. For example, Australian beef sales to China have grown sixfold between 2012 and 2015, and the global beef price has risen about seven per cent over the last decade. So what you're saying is more like more beef sold and it being sold at a higher price? Fantastic news today. It's great news. John introduced the company that we hope is going to take advantage of that. [00:29:41][42.0]

Bryce: [00:29:41] Yes, introducing AAC. The Australian Agricultural Company.[00:29:50][8.8]

Alec: [00:29:51] very creative name. [00:29:52][0.8]

Bryce: [00:29:52] Yeah, they're great. And they are a beef producer, especially at their core. And as Ren as mentioned before, [00:30:00][8.0]

Alec: [00:30:01] that's the reason we, like I say, used to be primarily focussed on the growing herd and then selling that herd to abattoirs. And that that was sort of the core competency and that's what they did well. And that's why they start to over the last couple of years, they vertically integrated. Now, for new investors out there, vertical integration is when you when you own all up all steps in the supply chain. So now what Australian Agricultural Company does is they continue to produce the cattle that grow the cattle, but then they also in the abattoirs and then they export the finished product as well. So the end, they are in the business end to end. And and that's really valuable because there's a lot more value that can be derived from the finished product, like selling packaged beef than there is from selling live cows to abattoirs. And what's also really important is that when you control, when you're vertically integrated, you're much better prepared to survive price shocks. So what we're saying at the moment is in the lamb industry, lamb prices are skyrocketing and abattoirs can't afford to buy the lambs. So we're saying it's an abattoir. Shut down the lamb. The lamb price rise is making it tough for some farmers. Obviously, some are benefiting from high prices. But as I say, it's a vertically integrated price fluctuations at any level in the supply chain that can sort of even out because they control it. And so it's a lot more stable. A company, they have [00:31:23][81.9]

Bryce: [00:31:23] much better control over the [00:31:24][1.2]

Alec: [00:31:24] total cost of production, for example. And you can reflect that in the final price. Yeah, what we're saying is that this vertical integration has resulted in a 45 percent improvement in revenue between the first half of the 2014 financial year and the first half of the 2016 financial year. So, yeah, there's a lot more value that can be added through the supply chain. And if you're vertically integrated, you capture all that value. So you make that money rather than, you know, selling your base to abattoirs who then at a premium and then sell it on to vertical integration is great for A.S.A.. It's already starting to show some results. And we're pretty bullish on these results continuing for a number of reasons, the least of which is that Australia has recently signed free trade agreements with China, Japan and South Korea. So that's all good for beef exporters. We see the growth of the Asian middle class not slowing down, and we think that that's going to keep driving demand for Australian beef. [00:32:21][57.1]

Bryce: [00:32:21] And it's also not just the Chinese that are driving this as well. South Korea and the United States. In 2016, sales to both those countries declined by 200 per cent in the United States and fifty six percent South Korea. So other markets are also growing considerably just because the quality of the beef that they're producing sales in 2016, revenue jumped by 45 percent to just under half a billion dollars. And this is off the back of some strategic changes that they made back in 2014. And they're now starting to see the results of this strategic change to address. That was partly due to the fact that they decided to integrate and take on another source of revenue by doing so. Since 2014, based sales made up 59 percent of total revenue in 2014. Afterpay now 79 percent in 2006 and 88 percent of that business, and they now have a strong focus on what you because that's really in South Carolina, a lot of revenue. Their ambition is to become a globally recognised Palm Beach producer. And in fact, they have won numerous awards for their work here, including being named the grand champion of the world, one of the world's largest companies. [00:33:34][72.5]

Alec: [00:33:35] And that's not bad. Yeah. So it doesn't come without risk, as we were talking about before. There are risks that, you know, there is more protectionism put in, especially by China in response to America that would be bad for the export business. There's also danger that, you know, the Chinese economy might have some troubles that will hurt the export market. But I mean, there's just there's not there's more general dangers as well. So because our beef is a commodity as the price fluctuates, that will affect their ability to make money, even though they're vertically integrated. If beef prices skyrocket, it will become it may become difficult to get a lot of demand from customers. So, yeah, look, there are there are dangers, but we're confident that over the long term, Australian beef has a bright future and Australian Agricultural Company are well placed to capitalise on that bright future. So it's currently trading at 060. Yeah. So we're going to go ahead and lock that in as number three, stock, the stock [00:34:36][60.8]

Bryce: [00:34:36] of the week. Number three to our portfolio, I'd say, because, as I said, we're pretty confident that we're in the right, the industry that at the very least. So be interesting to see how we go. Yeah. So that wraps up episode seven. You've enjoyed it. Before we wrap up as we started with, we have just finished and we all got to say a very interesting company, but is shaping up the Australian superannuation industry and targeting twenty five to thirty five year olds specifically and superannuation funds trying to change the way that we think about superannuation [00:35:12][35.6]

Alec: [00:35:12] or just trying to get us to start thinking about superannuation. [00:35:14][1.9]

Bryce: [00:35:15] And they have a very strong focus on the technology sector, which is something that we would definitely be talking about. And coming up. So, you know, working in the Amazon business, I suppose, in the world. Yeah. So that's going to be coming up after this episode. [00:35:28][12.9]

Alec: [00:35:29] Unfortunately, we didn't get a photo. We might you might Photoshop. Want to put it up, look out for that on our Facebook or Twitter in the coming days. [00:35:37][7.6]

Bryce: [00:35:37] And as always, please get the feedback coming in. Really appreciate hearing from you guys. [00:35:41][3.5]

Alec: [00:35:42] Yeah. And send us any questions you have as well. So that BASIX one on one we did today, that was based off a listener question. So we really appreciate them coming in. [00:35:51][9.6]

Bryce: [00:35:52] Yeah, awesome. So that's it for this week, guys, after number seven, look forward to talking to you next episode. [00:35:52][0.0]

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