Treasury Wine shares up as China tariffs set to lift
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More news: Treasury Wine Estate shares lifted after the China Ministry of Commerce released an interim draft proposal to remove Chinese tariffs on Australian wine imports.
Shares were up 1.14% to $12.42 by 3:04pm AEDT.
What they said: Meanwhile, Jarden analysts held its 'overweight' rating on the company as it said the tariff removal probability was high and that it was not fully priced into the share price. Jarden has a price target of $12.90.
They said the tariff removal would give Treasury Wines an opportunity to increase Penfolds prices by 5% to 7%, increase volume, expand its entry level wines Koonunga Hill and Max and create further tightness of demand, and its Penfolds outlook would improve as it would be the highest multiple business within the company.
The key risk, Jarden said, was the cost to re-launch the product, which could limit near-term upside from higher pricing.
China review of tariffs on track, Treasury Wine says
The news: Treasury Wine Estates says China’s review of tariffs on Australian wine imports remains on track after that country’s commerce ministry released an interim draft determination proposing to lift the current sanctions.
The numbers: China agreed in October to review its punitive tariffs of up to 200% on Australian wine exporters. Treasury Wine said late on Tuesday that a final determination by the Chinese Ministry of Commerce is expected within weeks.
The context: Australia’s top winemaker, which owns premium brands such as Penfolds, Wolf Blass and Lindemans, has previously said it is “well placed” to rebuild its business in China through a series of plans which would be implemented progressively over time.
These would include continuing to focus on a multi-country of origin portfolio where it grows and makes wine for the Penfolds brand in France, the US and China, rebuilding distribution for Penfolds entry-level wine in China and reallocating a portion of luxury Penfolds wine from other global markets to China.
Treasury Wine had delayed allocating its annual vintage of the high-end Penfolds wine to different countries, anticipating a restart of shipments to its largest export market. It said on Tuesday the incremental earnings contribution from the re-establishment of the Australian country of origin portfolio in China would be minimal through the remainder of the current financial year.
The source: ASX announcement
