DNR Capital backs Treasury Wines despite China threat
The threat by China to Australian’s wine market has failed to deter DNR Capital from its stake in Treasury Wines, believing the company is unlikely to dump its wine into China.
Yesterday, it was announced that China was planning to levy import duties on Australian wine exports, the large majority of which came from Treasury Wines. The Chinese Ministry of Commerce also announced it had initiated an anti-dumping investigation into Australian exports into China.
In response, shares in the company fell by 14% on the news. Since the start of the year, shares in Treasury Wine had fallen 25% and it was one of the worst-hit companies in the March market crash.
Share price performance of Treasury Wines versus ASX 200 since start of the year to 17 August
In a statement to the Australian Securities Exchange, Treasury Wines said: “TWE will of course co-operate with any requests that we receive for information from Chinese or Australian authorities.
“As an importer of high-quality, premium Australian wine, including brands like Penfolds, TWE remains committed to China as a priority market and will continue to invest in its Chinese business and its relationship with customers and consumers.”
According to FE Analytics, there was only one Australian equity fund within the Australian Core Strategies universe that held Treasury Wines within its fund.
This was the DNR Australia Equities High Conviction fund which had a 4.1% weighting.
Jamie Nicol, chief investment officer at DNR Capital, said: “It is difficult to envisage that Treasury Wines are dumping Penfold’s into China given the premium pricing they get in that market.
“The Chinese demand for Australian wine, particularly Penfold’s, remains very strong. Further we have seen the Chinese market recover in recent times. While we suspect this issue might impact the stock for a while, the strength of the brands and market position should ensure the consumer remains interested in Penfold’s.
“While China might desire their wine companies win some share, consumers of high-end wine might have other ideas over the long term."
AUTHOR
Laura Dew
Recommended for you
The $673 billion global investment manager has appointed a former Zenith sales head as it seeks to expand its reach in the Australian wealth management market.
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.
