Consensus community valuation
$15.38
Average Intrinsic Value
40.8%
Undervalued by
Active Member Straws
#Bear Case
Added a month ago

I recently completed a big university assignment on TWE and found them quite interesting.

Their US operations have performed poorly leading to a poor half yearly result in January.

 

In the short term i think there is massive downside risk, which outweights any potential return given the likely trade complications with China and Covid related production issues with vinyards in Europe (France). 

The potential de-meger of Penfolds will be an interesting watch, potentially in 2021.

The only way i can see a buy here is for an extended investment period (5-10 years), where a recovery from COVID is realistic and they can get back to decent financial performance

 

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#Business Model/Strategy
Added 2 months ago

Decline from all time high and expecting some headwinds in the short term with China trade tensions but big potential as trade and COVID restriction ease in long run. 
also Penfolds separation potential makes for an intriguing opportunity 

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#Bear Case
Added 3 months ago

- Litigation cases stains TWE's reputation putting strain on their future viability

- Penfolds an unsuccessful spin-ff due to various reasons (poor management, funding issues, etc)

- Covid-19's effect on wine production and world trade has long-term effects which severly handicap TWE's world operation

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#COVID-19 Update
Added 4 months ago

08-Apr-2020:  Strategic review outcomes and COVID-19 update

The big news here is Treasury Wine's update on the outcomes of their strategic review and that they are considering a demerger of the Penfolds business and associated assets into a separate ASX-listed company by the end of 2021.

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#FY20 Guidance Downgrade
Added 6 months ago

29-Jan-2020:  1H20 Profit Report, Revised F20 Guidance & Presentation

TWE are down over 20% so far today on the back of this guidance downgrade.  That could be an overreaction (which would be pretty typical for our market) but it could also be the start of worse to come.  Downgrades often come in threes.  The first is rarely the last.  I don't follow TWE closely, but I note they describe US Market conditions as "Challenging" and anything that is China facing seems to be getting sold off on Coronavirus concerns.  TWE are really an export story now, and if they are finding those export markets to be "challenging", that's not a good sign.

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#Bull Case
Added 3 months ago
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