Citi notes the increased risk from China’s anti-dumping investigation. Australian wine accounts for 25% of all imports and it’s not clear from the data there is dumping.
Citi estimates China accounts for 7% of Treasury Wines volumes and 35% of its earnings (EBIT). In the longer term, if tariffs were reintroduced then volumes could fall -50% to China, however the broker considers the probability low at this stage.
Citi also notes the market has reacted swiftly to the risk but awaits more details about the potential ramifications. Neutral rating.
Sector: Food, Beverage & Tobacco.
Target price is $12.65.Current Price is $9.98. Difference: $2.67 – (brackets indicate current price is over target). If TWE meets the Citi target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
