ASX wine stocks climb after China scraps tariffs
Make us a preferred source
Make us a preferred source on Google
The news: Shares in winemakers lifted on the ASX on the first day of trading since China scrapped its tariffs on Australian wine.
The numbers: Treasury Wine Estates shares were up 2.37% to $12.72 and Australian Vintage shares were up 6.25% to $0.42 by 12:55pm AEDT.
Last week, the Albanese government confirmed that China would lift its prohibitive duties that have in place since 2020.
Australia’s wine exports to China were worth $1.1 billion in 2019, but the local wine industry has been damaged after China imposed tariffs during a diplomatic dispute with the Morrison government four years ago.
The context: Morgan Stanley analysts maintained their overweight rating and price target for Treasury Wine at $13.75 per share. They noted that the removal of tariffs created a "medium-term growth opportunity", with "near-term modest growth", driven by added shipments into China and incremental price increases. The gains, however, would be partially offset by increased overheads and brand investment in China.
UBS analysts retained their 'buy' rating for Treasury Wine. They noted that while China remains "an attractive wine market" and the removal of tariffs "increases global demand for [Treasury Wine's] product", the size of China's market has decreased over the past decade, and Treasury Wine now has a more diversified earnings base by market.
The sources: UBS research, Morgan Stanley research
