Stay On The Buy Side Of Treasury Wine

TWE held their AGM last Thursday which was co-located in Hong Kong and Melbourne.

Chief executive ­Michael Clarke said earnings for 2019 would be bolstered by its new distribution model in the US, which was gaining traction with industry players, and its ability to deliver more luxury wine to its consumers.

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He also reiterated his guidance for 25% EBITS growth in 2019 and noted that 1Q results were in line with internal plans for every revenue location.

In August, TWE reported a 34% jump in full-year net profit to $360 million as revenue fell by 1.5 per cent to about $2.5 billion.

Despite this upbeat news, TWE share price has been unable to hold above $17.00.

We consider this more a transitory function of the overall re-balancing of the ASX 200 Index, than a specific valuation issue with TWE.

As such, we suggest accumulating shares at current levels with an initial upside target of $19.40 and then $21.60.  Treasury Wine Estates


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