Green Shoots in Treasury Wine’s Otherwise Challenging Fiscal 2020; AUD 12.30 FVE Maintained

As flagged in its July 9 results preview, no-moat Treasury Wine Estates reported a tough fiscal 2020. Competitive pressure in the U.S. and the coronavirus pandemic led to second-half revenue falling 16% and adjusted operating earnings (referred to as EBITS by the firm) declining a massive 50%. This resulted in a full-year revenue drop of 7.1% and EBITS falling 21.7% to a 20.1% margin. We expect continued near-term challenges given international border closures, ongoing restrictions, and a difficult economic situation.