Business SummaryTreasury Wine Estates Limited (TWE) is a global wine company with aninternational portfolio of wine brands and viticultural assets. TWE's wineportfolio includes wine brands: Penfolds, Beringer, Lindemans, Wolf Blassand Rosemount Estate and more. The Company owns over 13,000 hectaresof vineyards, with more than 3,000 winemakers, viticulturists, sales, distributeand support staffs. TWE wine is sold in more than 100 countries around theworld.

Australia & New Zealand Wine (ANZ): The business is responsible for themanufacture, sale and marketing of wine within Australia and New Zealand.TWE continues to be the supplier of premium wine brands to the region.

Europe, Middle East and Africa (EMEA): The business is responsible forthe sale and marketing of wine within the EMEA region, with a dominantmarket in United Kingdom. The EMEA region includes the UK, ContinentalEurope, the Middle East and Africa, as well as key Nordic markets such asSweden, Finland and Norway.

Americas: This market of TWE including US, Canadian, Latin American andCaribbean. The business is responsible for the manufacture, sale andmarketing of wine within the Americas region.

Asia: The business is responsible for the sale and marketing of wine withinthe Asia region. TWE sells masstige and luxury wines throughout Asianmarkets which are Singapore, Hong Kong, Malaysia, Thailand, China, Japan,Taiwan and Korea.

Latest ResearchA Bitter Year, But Will Next Year Be Better?

Multiple hits to earnings — Treasury Wines has provided guidance forFY20e

EBITS of $530-540 million. The guidance means that 2H20e EBITS wasdown 50%. We expect 1H21e to fall 25%, but 2H21e should start arecovery. The combination of a weaker on-premise channel, lower luxurywine intake and likely brand exits keeps us cautious. We lower our EPSforecasts by 4%-8% over the next three years.

For more information see research 10 Jul 2020.

GICS - Food/Beverage/Tobacco

Treasury Wine Estates Limited

ASX Code: TWE Price: $10.66 12 Mth Target Price: $10.90 Rating: Neutral

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

6 August 2020$7,684m720.8m$19.47$8.40

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Neutral$10.902.2%3.0%5.3%

Investment FundamentalsFYE 30 Jun 2019A 2020F 2021F 2022F

Profit $m 422.0 318.0 322.0 383.0Profit (norm)* $m 422.0 318.0 322.0 383.0

EPS* ¢ 58.0 44.0 45.0 53.0EPS Growth % 18.4 -24.1 2.3 17.8P/E* x 18.4 24.2 23.7 20.1P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 38.0 20.0 25.0 36.0Yield % 3.6 1.9 2.3 3.4Franking % 88.0 100.0 75.0 75.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2015A 2016A 2017A 2018A 2019A

Sales Revenue 1,848 2,233 2,402 2,429 2,883Total Revenue ex. Int. 1,968 2,347 2,571 2,506 2,916EBITDA 248 432 558 611 779Depreciation & Amort. -84 -99 -108 -98 -103Goodwill Amortisation -- -- -- -- --EBIT 163 334 449 514 676Net Interest -22 -21 -27 -33 -52Profit Before Tax 141 312 422 480 624Income Tax -57 -95 -130 -138 -172Outside Equity Int. -- -0 -1 -0 --Profit after Tax 84 218 291 342 452Significant Items after Tax -6 -38 -22 18 -33Reported Profit after Tax 78 179 269 360 420Preferred Dividends -- -- -- -- --

Cash Flow ($M)2015A 2016A 2017A 2018A 2019A

Receipts from Customers 2,512 2,992 3,237 3,263 3,689Funds from Operations 232 449 439 418 579Net Operating Cashflow 176 417 382 295 416Capex -91 -134 -210 -215 -160Acquisitions & Investments -- -804 -26 -- -1Sale of Invest. & Subsid. -- -- -- -- --Net Investing Cashflow -85 -851 -130 -165 -58Proceeds from Issues -- 475 -- -- --Dividends Paid -85 -111 -185 -204 -245Net Financing Cashflow -36 582 -253 -280 -46Net Increase Cash 54 148 -0 -150 312Cash at Beginning 52 109 252 241 89Exchange Rate Adjust. 3 -5 -11 -2 1Cash at End 109 252 241 89 402

Ratios and Substantial Shareholders2015A 2016A 2017A 2018A 2019A

Profitability RatiosEBITDA Margin % 13.39 19.37 23.22 25.15 27.02EBIT Margin % 8.82 14.94 18.71 21.14 23.44Net Profit Margin % 4.54 9.74 12.12 14.10 15.69Return on Equity % 2.76 5.99 8.08 9.81 12.22Return on Assets % 2.48 4.50 6.14 7.08 8.71

Debt/Safety RatiosNet Debt/Equity % 8.81 10.30 9.97 22.60 20.13Interest Cover x 7.55 15.73 16.58 15.37 13.00

Top 5 Substantial ShareholdersBlackRock Group 6.3%The Capital Group Companies, Inc. 6.1%

Balance Sheet ($M)2015A 2016A 2017A 2018A 2019A

Cash & Equivalent 122 256 241 89 402Receivables 480 570 578 562 635Inventories 704 904 948 1,012 1,024Other Current Assets 46 38 32 33 30Current Assets 1,444 1,866 1,835 1,742 2,169Prop. Plant & Equipment 929 1,154 1,329 1,416 1,399Intangibles 791 1,060 1,096 1,129 1,164Other Non-Current Assets 46 38 32 33 30Non-Current Assets 2,706 3,511 3,444 3,704 3,832Total Assets 4,150 5,377 5,279 5,446 6,000Interest Bearing Debt 391 631 600 880 1,148Other Liabilities 708 1,112 1,070 1,070 1,146Total Liabilities 1,099 1,742 1,671 1,949 2,294Net Assets 3,051 3,635 3,608 3,496 3,706Share Capital 3,061 3,534 3,529 3,235 3,244Reserves -23 20 -24 0 34Retained Earnings 10 78 100 256 424Outside Equity Int. 3 3 4 4 4Total Shareholders Equity 3,051 3,635 3,608 3,496 3,706

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Ms Kirsten GrayMr Paul Conroy

Directors

Ms Colleen Jay(Non-Executive Director)Mr Garry Arthur Hounsell(Non-Executive Director)Mr Paul Ashley Rayner(Non-Executive Chairman,Non-ExecutiveDirector)Ms Antonia (Toni) Korsanos(Non-Executive Director)Mr Warwick Lynton Every-Burns(Non-Executive Director)Mr ED Yiu-Cheong Chan(Non-Executive Director)Ms Lauri Shanahan(Non-Executive Director)Ms Louisa Cheang(Non-Executive Director)Mr Timothy Ford(Chief Executive Officer)

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Treasury Wine Estates Limited

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