We Expect Treasury’s Earnings To Grow Without the Chinese Market

We maintain our AUD 11.50 fair value estimate for shares in Treasury Wine Estates following the release of interim fiscal 2022 earnings that were broadly as expected. Underlying EBIT fell 7% to AUD 262 million as 176% tariffs on Australian wine imposed by the Chinese Ministry of Commerce effectively shut Treasury's door to the lucrative Chinese market during the prior corresponding period, or pcp. We maintain our fiscal 2022 underlying EBIT forecast of AUD 565 million--an increase of 11% on fiscal 2021. Treasury declared a fully franked interim dividend of AUD 15 cents per share, in line with the pcp, and we continue to forecast total fiscal 2022 dividends of AUD 32 cents per share, representing a payout ratio of around 65% of underlying EPS.