too cheap!!, page-10

CWT has 4 Vineyards (Sandy Hollow, Bethany Creek, Hermitage and Cowra) where leases have either expired or will do so shortly and tenant has indicated they wont be renewing. These are low value vineyards (total 8.6M$ valuation). Negotions have been ongoing since June but so far no ann, which suggest there may be difficulties in disposal or releasing.

Also of concern is that approximately 1/2 of all vineyard valuations is the vines. Hence large % cap loss if sold as land only.

Up until a couple of years back CWT also ran a DRP which tended to reduce SP by same amount as div. Fortunately this has stopped.

On the plus side, CWT vineyards are generally very efficient low cost producers. The fall in Aus$ should help wine exporters. In a recession alcohol consumption tends to increase, but mostly cheap stuff (cask wines). Loan interest rates are fixed so a fall wont help CWT directly. However an increasing gap between BBSW and %div will be a positive.

Keep in mind all LPTs have been hammered in last 18 months, CWT less than most.

I am a long term holder but recognise potential problems and will not be increasing holding intil I can see more clarity on expired leeses.