Shares from other countries are an increasingly big part of Australians’ investment portfolios, and rightly so; the world of listed equity has never been more accessible.

But there is also a sizeable cohort of international companies hiding in plain sight on the Australian Securities Exchange (ASX), which hosts 157 foreign listings. Of these, 77 are CHESS Depositary Interests (CDIs), 49 of them are “ASX foreign exempt listings” and the rest being “ASX listings.”

CDIs represent a simple way for foreign companies to list an instrument in Australia that represent the underlying foreign-listed shares, with the CDIs trading at a CDI-to-shares ratio of the issuer’s choosing.

A company that is already listed on a foreign exchange that meets ASX’s minimum admission criteria can also list on the ASX as an ASX Listing or ASX Foreign Exempt Listing.

A company that dual lists on the ASX as an ASX Listing must generally comply with all of the ASX Listing Rules; an ASX Foreign Exempt Listing is exempt from most of ASX’s Listing Rules, as long as it complies primarily with the rules of its home exchange. ASX has attracted Foreign Exempt listings from New Zealand, Israel, Singapore, Malaysia and Ireland, but other than for New Zealand companies, high financial thresholds apply for a company to be admitted as an ASX Foreign Exempt Listing.

New Zealand has the largest number of listed companies on the ASX, and I’ll look at some of the best investment opportunities in that cohort next week. But here are three of the best non-Kiwi foreign listings.

1. Block Inc. (SQ2, $112.40)

Market capitalisation: $4 billion

12-month total performance: –25.4%

Three-year total performance: n/a

Analysts’ consensus target price: $145.00 (FN Arena, four analysts)

Block Inc. – then known as Square – became one of the highest-profile CDI listings in January 2022, when the US financial technology conglomerate completed its merger with ASX retail investor darling Afterpay, using its own New York Stock Exchange-listed shares as currency.

Afterpay shareholders who took the offer now own the ASX-listed CDIs, which trade one-for-one with the US scrip. The Aussie buy-now, pay-later (BNPL) pioneer is now part of a much bigger business – which Block calls its “ecosystem” – alongside:

• Square, a merchant payments acceptance and processing system;
• CashApp, a smartphone payment service and digital wallet; that allows users to make peer-to-peer transfers, trade shares and bitcoin and more;
• TIDAL, a global music streaming platform aimed not just at consumer, but to help artists succeed
• Spiral, a bitcoin-focused entity within the Block ecosystem that builds and fund free, open-source projects that improve bitcoin’s privacy, security, user experience, and ability to scale, and
• TBD, an open-source platform for decentralized and permissionless financial services, aimed at making it easier to access Bitcoin and other blockchain technologies without having to go through an institution.

Block is using Afterpay to bolster both Cash App and Square, to build-out a broader commerce platform. The company sees Afterpay as the connector between its Square and Cash App ecosystems. Since Block took over Afterpay, it has focused on growing Afterpay’s customer base, managing its loss rate and driving increased consumer frequency of use. Block made Afterpay available to online merchants in Australia and the US; Afterpay got the opportunity to take advantage of Block’s lucrative global merchant base.

The Afterpay BNPL service has fitted in nicely to the Block ecosystem – we’ll know more when we see the December 2022 quarter earnings report. But Australian CDI holders will likely reap the benefits of being part of a bigger business.

The takeover was poorly timed in hindsight, with the jump in interest rates in early 2022 slamming the valuations of tech stocks in general, and the fintechs were not immune. It did not help that investors were looking closely at Block’s bitcoin interests. From a peak of $194.36 in April, Block CDIs slid to $81 in June, before beginning a slow recovery. At $112.40, analysts see Block as cheap buying: FN Arena has an analysts’ consensus target price of $145.

2. Zimplats (ZIM, $28.10)

Market capitalisation: $3 billion

12-month total performance: 31%

Three-year total performance: 43.5% a year

Analysts’ consensus target price: n/a

The Guernsey-registered Zimplats has been listed since 1998: it is not a CDI, it is a foreign listing. The company is a subsidiary (87% shareholding) of one of the world’s leading producers of platinum group metals (PGMs), the South African-based and listed Impala Platinum Holdings Limited (Implats).

The company’s wholly owned operating subsidiary in Zimbabwe is Zimbabwe Platinum Mines (Private) Limited, which produces PGMs from the ore bodies located on the country’s Great Dyke geological feature. Production from the company’s five underground mines – which contain some of the largest platinum reserves in Southern Africa – is processed by three concentrators and then further refined at the company’s smelter at Selous.

In FY22, Zimplats reported an 8% fall in revenue, to US$1.23 billion, and a 37% fall in net profit, to US$353.6 million. The unfranked dividend surged 190%, to US$1.90 – which puts ZIM on a trailing yield of 9.4%, in $A terms.

Ounces of 6E (the six metals that make up the platinum group, namely ruthenium, rhodium, palladium, osmium, iridium and platinum) sold in FY22 increased by 15% to 623 000 ounces. Zimplats also produces gold, silver, nickel, copper and cobalt.

The precious metals platinum and palladium are vital components in autocatalytic converters which play a significant role in controlling air pollution by reducing emissions in both gasoline and diesel engines. But it is some of the company’s lesser-known metals that are driving ZIM’s strong share price.

For instance, rhodium – of which only 30 tonnes is produced every year, for uses including fibre optic cable coating, crucible manufacturing, and headlight reflectors – is experiencing increasing demand because of its use as a catalyst in cars to reduce the amount of nitrogen oxide in exhaust fumes. More stringent environmental regulations around the world will only drive this demand higher.

Separately, iridium and ruthenium are considered the best anode catalysts within proton exchange membrane PEM electrolysis (platinum is considered the best cathode catalyst), and PEM electrolysis is going to be crucial to the production of “green” hydrogen. In conjunction with the use of platinum in automotive fuel cells, the platinum group metals are critical metals for the clean energy transition and the hydrogen economy.

Last year, Zimplats approved a US$1.8 billion ten-year capital spending program aimed at expanding production levels through growth projects, to boost nameplate capacity by almost one-third, to about 8.8 million tonnes a year. The company currently has reserves for 30-years-plus of mining.

Zimplats Holdings has an ROCE of 26%, down from 39% in FY21, a return much better than the Metals and Mining industry average of 10%. It is a great business, and it is poised for continued growth, as the metals it produces become even more sought-after, in the clean energy transition.

ResMed (RMD, $33.65)

3. Market capitalisation: $48.2 billion

12-month total performance: 7.7%

Three-year total performance: 13.2% a year

Analysts’ consensus target price: $36.57 (Stock Doctor/Thomson Reuters, 13 analysts), $36.71 (FN Arena, six analysts)

Although ResMed was originally an Australian company, it is now based in San Diego: the Australian listing is CDIs, ten of which represent a New York-listed share. ResMed is one of Australia’s global leaders, with its core business in devices that help people suffering from obstructive sleep apnoea (OSA), chronic obstructive pulmonary disease (COPD) and other respiratory conditions to sleep better.

ResMed’s crucial advantage is its continuous positive airway pressure (CPAP) machines and masks, which give it a strong market position, being considered the industry standard for moderate to severe cases of OSA. Sleep breathing disorders is a competitive business, and ResMed has three big global rivals, but it has benefited from the largest of those, Dutch company Philips, having to perform safety recalls for several of its devices. Philips has been battling with this issue since mid-2021, and its problems have had the effect of boosting ResMed’s dominance of the global CPAP marketplace.

ResMed is coming off a robust December quarter, with revenue surging 16% to $US1.03 billion ($1.45 billion) compared with the same period in 2021, beating analysts’ expectations. Meanwhile, net profit rose 13% to $US244.4 million ($344 million). Software-as-a-Service (SaaS) revenue increased by 18%.

ResMed served 149 million customers in 2022 and expects to increase that number to 250 million by 2025. While the target sounds ambitious, ResMed says it is only 10% of the total need, estimating that 2.5 billion people worldwide have sleep apnoea, insomnia or other related disorders. That gives the company huge room for growth.

ResMed is a small dividend payer – on FN Arena’s analysts’ collation, the forecast FY23 yield is 0.7%, unfranked – but the real benefit of this stock is solid long-term growth, as it steadily builds on its market share and monetises the patient data that its machines collect.