Updates To Big Idea 2

Recently I spoken to this acquaintance that was quite knowledgeable on the Australia side of things. I always wonder why Big Idea 2 has a significant exposure in Australia. Thus, this gave me an opportunity to ask more about the property market in Australia and especially those projects relating to Big Idea 2.

Picture taken from britannica.com

Below are the information I remembered. Do note that I did not verify all the information and these are just pieces of our conversation.

1. The Australia Government made it hard to purchase properties in the country (read article).

2. Australians are not good savers and due to Basel ruling, banks are unable to lend out too much.

3. On the other hand, Australia Banks are also very conservative. During GFC, these banks had almost no exposure. However, being conservative, they also did not “go out and grab more market share”.

4. The big 4 Australia Banks also supports New Zealand. Due to regulations and restrictions, these 2 countries can already provide them A$20Bn of net profit. That is why they can continue to stay within their boundaries.

5. Australia is self-sufficient due to their huge amount of resources. They can ignore the world.

6. In Australia market, everyone is mostly after yield. No one should expect huge capital gains. It's a market for capital preservation rather than making significant gains.

In Short

With the above information, I became more aware of why Big Idea 2 is interested to invest/expose itself in Australia. This is because, overall, Big Idea 2 is a conservative company. From my understanding, its’ management does not take big risk. This knowledge have strengthen my view on Big Idea 2.

Big Idea 2 will be announcing their Full Year Results in August and I am looking forward to a better set of results.

But at the same time, I do not think there will be special dividend this year. This could potentially reduce the share price gain despite possibility of having a good full year results. 

Please do your own due diligence before you invest this counter.

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