October 1, 2025 • 10 mins
The standoff between China and BHP over iron ore is an extreme reminder of how reliant we are on our relationship with China, our biggest trading partner.
Sean Aylmer speaks to Jun Bei Liu, co-founder and lead portfolio manager at investment firm Ten Cap, about BHP and other Australian stocks that have exposure to China.
This is general information only. Seek advice before making investment decisions.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Fear and Greed Q and A where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. The standoff between China and BHP over
iron ore is a reminder, albeit an extreme one, of
how reliant we are on our relationship with China, our
biggest training partner. To that end, today I want to
look at some of the Australian companies on the AX
(00:26):
that have a lot of exposure to China. Remember this
is general information only and you should see professional advice
before making investment decisions. Juin Beilu is co founder and
lead portfolio manager at investment firm ten Cap. Jin bab
Welcome back to Fear and Greed.
Speaker 2 (00:42):
Thank you for having me, Sean Okay.
Speaker 1 (00:44):
BHP very much in the news because of the standoff
with China over iron ore shipments. How much worried should
we be? What about BHP as an investment option given
this is happening.
Speaker 2 (00:57):
Yeah, that's right. Look, look I still think that this
is a negotiation tactic from the China perspective. Remember, iron
ore prices has held incredibly strong when everyone said it
should be going down at least twenty percent lower. Every
analystic's expecting iron ol prices will be ten to fifteen
percent lower in the next twelve months. So you know,
it's held up really re strong. And now China is
(01:20):
wanting to make a stance that you know, negotiating contract
want bit of a cheaper option, a cheaper iron ore now.
But there is a bit of confusion of what they
have halted. They're not really halting the contracted volume. It's
really the spot volume. So the ones that get sold
at the higher prices, the current higher prices, not the
ones they're obligated to deliver. And then you know, BHP,
(01:42):
the management believes, is a negotiation tactic and we believe
so too.
Speaker 1 (01:46):
Okay, so beyond this negotiation tactic, what do you think
the outlook for BHP is, given it is as exposed
to China.
Speaker 2 (01:54):
Sure, I think the outlook for BHP is actually really good.
Everyone's sitting there waiting for a share price to come
by a bit more on this news flow, and clearly
it hasn't only fallen a little bit, you know, after
recently quite a good rally because PHP see even though
sixty five percent of sixty to sixty five percent of
you know, the earnings come from the iron ore front,
(02:14):
which is directly related to China, but the other part
of the business actually forty percent of the business is
actually copper, and these days you can't get enough of copper.
There's shortage here and there's a demand everywhere, you know,
and then the global growth doing bit better. So BHP
actually looks very attractive here a.
Speaker 1 (02:32):
Two milk one of my kind of I think one
of the more fascinating stocks over the last five years
or sixty since we've been doing this show. It absolutely
surged at one point, then was dumped. It sort of
come back a bit.
Speaker 2 (02:43):
What's its prospects, Yeah, prospert is actually pretty good. So
this company has really come through to become a real business,
branded business that actually sells to a majority of the
cities now in China three tiers, Tier one, tiers two,
tier three cities now and built is a proper you know,
the sales channel compared to many years ago, it used
to be a diago of people buy some here, shipper
(03:04):
over there, and then make a margin. So companies done
really well, keep reinvesting. During the tough times when China
had birth rate issues, had you know, a consumer slump company,
continue to reinvest and now it's actually reaping the rewards
grew double digit, even the baby birth rate hasn't increased.
But now it actually looks like China Consumer's coming around
(03:27):
and the growth leverage is phenomenal for this company.
Speaker 1 (03:30):
You mentioned China Consumer there, what do they mean? How
are they performing at the moment? And I suppose I've
got Treasury wines in the back of my mind when
I say that very much a consumer based company. Obviously
we have the tariff issue with China that's rebounded. They're
selling back, Treasury is selling back into China, but it
does depend a lot on the Chinese consumer.
Speaker 2 (03:48):
That's right. China Consumer actually is doing a little bit better,
even though their housing is still pretty tough, but it
stopped getting a whole lot worse. So China Consumer is
turning the corner. Usually I take a a barometer for
China consumer confidence is actually their share market. Their share
market has been one of the best performing so far
this year. You know, off the lower base, but consumer
(04:09):
is definitely feeling stronger and better, but not red hot,
but they are feeling stronger. They are spending. They're spending
a lot on the white goods. They are traveling a
little bit, but they are a little bit selective with
some of the you know, more discretionary. And now with
the Treasury Wine is actually quite interesting. There is a
few issues with this company. So even though China tariff
(04:30):
is gone, Chinese you know, rushed back to buy the
Treasury which is you know, growing really well the China market.
But the thing is, more recently, Chinese government has now
put out this policy saying that lunchtime country. They don't
want that lunch type country. They essentially say, Chinese up.
They don't want to see the officials you know, be
drinking at lunchtime, which is you know, probably a sensible policy,
(04:53):
that's right, given most of the things they drink are
white liquor are very very high alcohol content. So that
has created a bit of indigestion for the alcoholic market.
And you know, Treasury Wine seems to hasn't been impacted
all that marsh, you know, because they're still catching up
into you know, all these lost volume over the last
few years. But it seems to be hitting a bit
of an issue with the alcoholic beverage space and also
(05:15):
Treasury I think the bigger problem is just globally, you know,
especially in the US, people just not drinking, young people
just not drinking enough. Why especially the commercial the cheaper
end of the why you know, the young people they're
in the US, they're having all these you know, marijuana
spices drink and that is just competing away some of
the lower end space. So yeah, it's going through a
bit of challenging period, you know, but look at the brand.
(05:38):
Paan Fall is still very very strong. Does represent quite
an interesting value at the moment.
Speaker 1 (05:43):
Okay, so let's move away from China. There's just a
few stocks that I'm interested in. Sigma Healthcare, did the
merger with Chemist Warehouse. Can that just keep running? I
mean it's sort of it's come off a little bit
where it's steadied perhaps is a better way of putting
it in more recent times. Can it keep running?
Speaker 2 (06:00):
Look, I can keep running the underlying don't worry about
the share pard don't look at the share price chart
that if you look at the underlying earnings, it's been
growing from strength to strength to strength. Now the share
price chart is kind of you know, there's a lot
of there are a lot of rich chemists out there,
and what has happened is that after the listing, you know,
many of them were selling bit by bit so and
(06:23):
then because there are so many of them, so they
creates a bit of indigestion for you know, for the
share price. But that's about it. But the earning itself
keeps going from strength to a straight and they're rolling
out stores. They've got international growth expansion. Uh, their you know,
core Stor is growing very strong. And then the price
differential between Woolworth or supermarket and Chemists Warehouse is now
(06:43):
widened against so they delivering good value for people. Just
means people are going to keep going back to that
to the store.
Speaker 1 (06:49):
Okay, let's go to the other end of the spectrum
and we'll keep the idea of overse's rollouts going. Dominoes. Dominoes.
Dominoes now has Jack Cowan of Hungry Jack Fine running
the store itself. It's share prices off ninety percent.
Speaker 2 (07:03):
Or more more than ninety percent.
Speaker 1 (07:06):
Yeah, what I mean what becomes of Dominis?
Speaker 2 (07:09):
Yeah, I actually think domino looks very interesting at this stage. Look,
it might take six months, that might take a little
bit longer, but aside from the management has recognized it's
overseas expension strategy. Perhaps it was way too ambitious. Just
focus on what's schedule to get the things right here
in Australia, and I think that strategy is right. So
now they're reviewing what's happening, what's going to happen in Japan,
(07:31):
They you know, France and Europe seems to be doing
a bit better, and they're focusing on all the money
that's not necessary to be spent. They're trying to cut
it back, and they do spend a lot of money
on for example, like one hundred million dollars on those
technology and things just not necessary, doing things smartly, and
they reinvest back into the franchise sea here in Australia
and when they do well, they roll out more stores
(07:51):
and they will grow. So I do think it is
very cheap for earning that is very very low as well,
and there's not much expectations by the analysts, so you
don't need to do much really just to get a
double digit growth. This is like Collin's Food four month
ago before he Rallly forty percent. I think this is
Domino It's coming.
Speaker 1 (08:07):
Do you know. I hope that's Jimbo. I hope that's
the case, because I've been thinking about that for Dominoes
for a while and hasn't happened yet. But we'll see pizza.
Speaker 2 (08:15):
The pizza is actually getting bit better.
Speaker 1 (08:17):
Is that right? Oh? Fair enough? I mean we're sort
of running out of time. But a couple of stocks
I want to quickly mention that have done really well.
Harvey Norman Consumer Discretionery, you know, along with JB High Fire,
those stocks have really run recently. Can Harvey Norman keep going?
Speaker 2 (08:30):
Yeah, that definitely can keep going. The housing is very
is absolutely in that early turnaround face and housing related
the retail sector. You know, as people get new houses,
they buying new furniture and the like, and that's just
at the early stage. Next twelve month we will have
incredible Earninge's growth. And we all know analysts are never
good at estmate estimating operating leverage on the up or downside.
(08:51):
So this is upside. So Ernie's will continue to get upgrader.
You will look cheap in twelve month time.
Speaker 1 (08:56):
Yeah, okay, in last three sixty we're all tracking our children.
We'll have stopped doing that minor a bit old now,
But last three sixty another stock which has run really hard.
What's the prognosis for that one.
Speaker 2 (09:06):
I think that still looks good. The companies at the
tipping point of monetizing it's huge user base. I use
three times a day, and my kids they set up
recircles with their friends. They check check check probably five
times a day. And so they just started monetizing it
very early days. You know, one is through paid and
two is through you know, different verticals, and three is
(09:27):
through advertising revenue opportunity very early days, and I think
that opportunity is phenomenal. So it's something that you probably
want to always have in your portfolio. It's a structural grower.
Speaker 1 (09:37):
June Beai, thanks for talking to Fear and Greed.
Speaker 2 (09:39):
Thank you for having me.
Speaker 1 (09:40):
That was June Bailu, co founder and lead portfolio manager
at investment firm Tencap. Just a reminder to please seek
professional advice before making investment decisions. If you've got something
you'd like to know, then send through your question on LinkedIn, Instagram, Facebook,
or at Fearangreed dot com dot au. I'm Sean Aelma
and this is Fear and Greed Q and day
Welcome to Fear and Greed Q and A where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. The standoff between China and BHP over
iron ore is a reminder, albeit an extreme one, of
how reliant we are on our relationship with China, our
biggest training partner. To that end, today I want to
look at some of the Australian companies on the AX
(00:26):
that have a lot of exposure to China. Remember this
is general information only and you should see professional advice
before making investment decisions. Juin Beilu is co founder and
lead portfolio manager at investment firm ten Cap. Jin bab
Welcome back to Fear and Greed.
Speaker 2 (00:42):
Thank you for having me, Sean Okay.
Speaker 1 (00:44):
BHP very much in the news because of the standoff
with China over iron ore shipments. How much worried should
we be? What about BHP as an investment option given
this is happening.
Speaker 2 (00:57):
Yeah, that's right. Look, look I still think that this
is a negotiation tactic from the China perspective. Remember, iron
ore prices has held incredibly strong when everyone said it
should be going down at least twenty percent lower. Every
analystic's expecting iron ol prices will be ten to fifteen
percent lower in the next twelve months. So you know,
it's held up really re strong. And now China is
(01:20):
wanting to make a stance that you know, negotiating contract
want bit of a cheaper option, a cheaper iron ore now.
But there is a bit of confusion of what they
have halted. They're not really halting the contracted volume. It's
really the spot volume. So the ones that get sold
at the higher prices, the current higher prices, not the
ones they're obligated to deliver. And then you know, BHP,
(01:42):
the management believes, is a negotiation tactic and we believe
so too.
Speaker 1 (01:46):
Okay, so beyond this negotiation tactic, what do you think
the outlook for BHP is, given it is as exposed
to China.
Speaker 2 (01:54):
Sure, I think the outlook for BHP is actually really good.
Everyone's sitting there waiting for a share price to come
by a bit more on this news flow, and clearly
it hasn't only fallen a little bit, you know, after
recently quite a good rally because PHP see even though
sixty five percent of sixty to sixty five percent of
you know, the earnings come from the iron ore front,
(02:14):
which is directly related to China, but the other part
of the business actually forty percent of the business is
actually copper, and these days you can't get enough of copper.
There's shortage here and there's a demand everywhere, you know,
and then the global growth doing bit better. So BHP
actually looks very attractive here a.
Speaker 1 (02:32):
Two milk one of my kind of I think one
of the more fascinating stocks over the last five years
or sixty since we've been doing this show. It absolutely
surged at one point, then was dumped. It sort of
come back a bit.
Speaker 2 (02:43):
What's its prospects, Yeah, prospert is actually pretty good. So
this company has really come through to become a real business,
branded business that actually sells to a majority of the
cities now in China three tiers, Tier one, tiers two,
tier three cities now and built is a proper you know,
the sales channel compared to many years ago, it used
to be a diago of people buy some here, shipper
(03:04):
over there, and then make a margin. So companies done
really well, keep reinvesting. During the tough times when China
had birth rate issues, had you know, a consumer slump company,
continue to reinvest and now it's actually reaping the rewards
grew double digit, even the baby birth rate hasn't increased.
But now it actually looks like China Consumer's coming around
(03:27):
and the growth leverage is phenomenal for this company.
Speaker 1 (03:30):
You mentioned China Consumer there, what do they mean? How
are they performing at the moment? And I suppose I've
got Treasury wines in the back of my mind when
I say that very much a consumer based company. Obviously
we have the tariff issue with China that's rebounded. They're
selling back, Treasury is selling back into China, but it
does depend a lot on the Chinese consumer.
Speaker 2 (03:48):
That's right. China Consumer actually is doing a little bit better,
even though their housing is still pretty tough, but it
stopped getting a whole lot worse. So China Consumer is
turning the corner. Usually I take a a barometer for
China consumer confidence is actually their share market. Their share
market has been one of the best performing so far
this year. You know, off the lower base, but consumer
(04:09):
is definitely feeling stronger and better, but not red hot,
but they are feeling stronger. They are spending. They're spending
a lot on the white goods. They are traveling a
little bit, but they are a little bit selective with
some of the you know, more discretionary. And now with
the Treasury Wine is actually quite interesting. There is a
few issues with this company. So even though China tariff
(04:30):
is gone, Chinese you know, rushed back to buy the
Treasury which is you know, growing really well the China market.
But the thing is, more recently, Chinese government has now
put out this policy saying that lunchtime country. They don't
want that lunch type country. They essentially say, Chinese up.
They don't want to see the officials you know, be
drinking at lunchtime, which is you know, probably a sensible policy,
(04:53):
that's right, given most of the things they drink are
white liquor are very very high alcohol content. So that
has created a bit of indigestion for the alcoholic market.
And you know, Treasury Wine seems to hasn't been impacted
all that marsh, you know, because they're still catching up
into you know, all these lost volume over the last
few years. But it seems to be hitting a bit
of an issue with the alcoholic beverage space and also
(05:15):
Treasury I think the bigger problem is just globally, you know,
especially in the US, people just not drinking, young people
just not drinking enough. Why especially the commercial the cheaper
end of the why you know, the young people they're
in the US, they're having all these you know, marijuana
spices drink and that is just competing away some of
the lower end space. So yeah, it's going through a
bit of challenging period, you know, but look at the brand.
(05:38):
Paan Fall is still very very strong. Does represent quite
an interesting value at the moment.
Speaker 1 (05:43):
Okay, so let's move away from China. There's just a
few stocks that I'm interested in. Sigma Healthcare, did the
merger with Chemist Warehouse. Can that just keep running? I
mean it's sort of it's come off a little bit
where it's steadied perhaps is a better way of putting
it in more recent times. Can it keep running?
Speaker 2 (06:00):
Look, I can keep running the underlying don't worry about
the share pard don't look at the share price chart
that if you look at the underlying earnings, it's been
growing from strength to strength to strength. Now the share
price chart is kind of you know, there's a lot
of there are a lot of rich chemists out there,
and what has happened is that after the listing, you know,
many of them were selling bit by bit so and
(06:23):
then because there are so many of them, so they
creates a bit of indigestion for you know, for the
share price. But that's about it. But the earning itself
keeps going from strength to a straight and they're rolling
out stores. They've got international growth expansion. Uh, their you know,
core Stor is growing very strong. And then the price
differential between Woolworth or supermarket and Chemists Warehouse is now
(06:43):
widened against so they delivering good value for people. Just
means people are going to keep going back to that
to the store.
Speaker 1 (06:49):
Okay, let's go to the other end of the spectrum
and we'll keep the idea of overse's rollouts going. Dominoes. Dominoes.
Dominoes now has Jack Cowan of Hungry Jack Fine running
the store itself. It's share prices off ninety percent.
Speaker 2 (07:03):
Or more more than ninety percent.
Speaker 1 (07:06):
Yeah, what I mean what becomes of Dominis?
Speaker 2 (07:09):
Yeah, I actually think domino looks very interesting at this stage. Look,
it might take six months, that might take a little
bit longer, but aside from the management has recognized it's
overseas expension strategy. Perhaps it was way too ambitious. Just
focus on what's schedule to get the things right here
in Australia, and I think that strategy is right. So
now they're reviewing what's happening, what's going to happen in Japan,
(07:31):
They you know, France and Europe seems to be doing
a bit better, and they're focusing on all the money
that's not necessary to be spent. They're trying to cut
it back, and they do spend a lot of money
on for example, like one hundred million dollars on those
technology and things just not necessary, doing things smartly, and
they reinvest back into the franchise sea here in Australia
and when they do well, they roll out more stores
(07:51):
and they will grow. So I do think it is
very cheap for earning that is very very low as well,
and there's not much expectations by the analysts, so you
don't need to do much really just to get a
double digit growth. This is like Collin's Food four month
ago before he Rallly forty percent. I think this is
Domino It's coming.
Speaker 1 (08:07):
Do you know. I hope that's Jimbo. I hope that's
the case, because I've been thinking about that for Dominoes
for a while and hasn't happened yet. But we'll see pizza.
Speaker 2 (08:15):
The pizza is actually getting bit better.
Speaker 1 (08:17):
Is that right? Oh? Fair enough? I mean we're sort
of running out of time. But a couple of stocks
I want to quickly mention that have done really well.
Harvey Norman Consumer Discretionery, you know, along with JB High Fire,
those stocks have really run recently. Can Harvey Norman keep going?
Speaker 2 (08:30):
Yeah, that definitely can keep going. The housing is very
is absolutely in that early turnaround face and housing related
the retail sector. You know, as people get new houses,
they buying new furniture and the like, and that's just
at the early stage. Next twelve month we will have
incredible Earninge's growth. And we all know analysts are never
good at estmate estimating operating leverage on the up or downside.
(08:51):
So this is upside. So Ernie's will continue to get upgrader.
You will look cheap in twelve month time.
Speaker 1 (08:56):
Yeah, okay, in last three sixty we're all tracking our children.
We'll have stopped doing that minor a bit old now,
But last three sixty another stock which has run really hard.
What's the prognosis for that one.
Speaker 2 (09:06):
I think that still looks good. The companies at the
tipping point of monetizing it's huge user base. I use
three times a day, and my kids they set up
recircles with their friends. They check check check probably five
times a day. And so they just started monetizing it
very early days. You know, one is through paid and
two is through you know, different verticals, and three is
(09:27):
through advertising revenue opportunity very early days, and I think
that opportunity is phenomenal. So it's something that you probably
want to always have in your portfolio. It's a structural grower.
Speaker 1 (09:37):
June Beai, thanks for talking to Fear and Greed.
Speaker 2 (09:39):
Thank you for having me.
Speaker 1 (09:40):
That was June Bailu, co founder and lead portfolio manager
at investment firm Tencap. Just a reminder to please seek
professional advice before making investment decisions. If you've got something
you'd like to know, then send through your question on LinkedIn, Instagram, Facebook,
or at Fearangreed dot com dot au. I'm Sean Aelma
and this is Fear and Greed Q and day
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