TREASURY WINES HITS BACK AT 'MISLEADING' DOWNGRADE, REAFFIRMS CHINA GROWTH STORY

TREASURY WINES HITS BACK AT 'MISLEADING' DOWNGRADE, REAFFIRMS CHINA GROWTH STORY

TREASURY Wine Estates (ASX: TWE) has reaffirmed earnings guidance for the second half of the 2017 financial year and hit back at an analyst's "misleading" downgrade of its stock because of "unrealistic" growth in the Chinese market.

Treasury says its forecast revenue of $1.37 billion and NPAT of $136.2 million remains intact as it reports its growth prospects in China remain strong.

The company made the statement in response to a downgrade by Goldman Sachs to a "sell" on its stock with a warning that its expectations for growth was unrealistic in a slowing Chinese market.

"In response to an analyst's comments on 31 July 2017 which potentially give rise to misleading statements, Treasury Wine Estates reaffirms its positive outlook for the imported wine market in China and TWE's performance in the region, notably in respect of pricing and profitability," the company says.

 
The wine maker says its volume growth in Asia has been driven by significant investment and outstanding brand building, supported by favourable imported wine market fundamentals in China.

"Significant opportunity for continued, sustainable growth exists in China as TWE expands into new, strategically important cities and provinces," the company says.

It is also driving further growth in existing tier one and tier two cities while targeting A&B income earners through its retail, wholesale, e-commerce, on-premise, convenience and global travel retail channels.

Treasury Wine, number 11 in our 2017 Melbourne Top Companies list, is the biggest supplier of imported wine by value in China, according to the IWSR global database.

Treasury says it expects the Asia region to deliver an earnings margin of 30 to 35 per cent on a sustainable basis, and that its Australian and Californian vintages from 2016 and 2017 would help drive growth in FY19.

Business News Australia

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