Treasury Wine Estates Earnings: Stronger Second Half Likely but All Eyes on China

We maintain our AUD 11.50 fair value estimate for Treasury Wine Estates. As anticipated, first-half fiscal 2024 earnings were soft with underlying EBIT declining 6% on the previous corresponding period to AUD 290 million. The Americas portfolio struggled, shipments to Asia declined, and some Penfolds product was strategically held back. The company expects a stronger second half and “mid to high-single-digit” underlying EBIT growth in fiscal 2024—before earnings from the recent acquisition of luxury winemaker DAOU. We lift our fiscal 2024 underlying EBIT forecast by 1% to AUD 662 million, including contributions from DAOU. This is about 7% underlying EBIT growth before DAOU.