Treasury Wine shares lift on China export growth
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The news: Wine maker and distributor Treasury Wine Estates was one of the top performers across the ASX 200 after new export data from Wine Australia showed growth in local exports to China during 2024.
The numbers: Treasury Wine shares were up 3.4% to $10.83 by 2:15pm AEDT.
Total Australian wine exports increased 34% in value to $2.55 billion during the 12 months to December 2024, according to the new data by Wine Australia, the federal government's statutory authority for the local wine industry.
The growth was driven by China, with $902 million exported in the nine months to December, following the removal of tariffs in March. Wine exports to China increased from $898 million to $907 million on an annual basis.
However, rest of world exports decline by 13% in value to $1.64 billion, driven by Hong Kong (-42%) and the US (-10%).
The context: UBS, Citi and Morgan Stanley all reiterated their positive ratings on Treasury Wine, with unchanged price targets of $14, $12.97 and $14.60 respectively.
Citi sees the new data as positive for Treasury Wine's near-term China prospects, with month-to-month volume increases suggesting growing customer demand ahead of Chinese New Year. However, Citi said it has greater concerns around the company's Americas business.
UBS said it remains upbeat on Treasury Wine, though investor sentiment remains mixed, with some concerns about inventory levels across the industry.
Morgan Stanley noted that the US market remains challenged due to ongoing surplus inventory, lower off-premise sales, and a shrinking number of on-premise outlets.
The sources: Morgan Stanley research, UBS research, Citi research
