Ann: Pause in Trading, page-50

There's two parts to this story. One if the geopolitical and macro issues that TWE is caught up in, and the other is how TWE responds.

Chris Uhlmann wrote an interesting opinion piece in The Age/Sydney Morning Herald. Basically said that Australia and other democracies should be seeking a balanced partnership, and we are the whipping boys for the world to see if we don't follow their rules. It's do as I say, not as I do. They should be able to invest wherever in Australia and avoid the FIRB, but for Australia there are 33 sectors completely off limits (including agriculture and land by the way); they should be able to have cultural centres on our university campus, but we aren't even meant to fund research that may embarass China; they should be able to have free access to our politicians and media, while our media and that of the world isn't even allowed to step foot in their country; etc. I reckon this issue still has a ways to go, and while Australian industries may be bearing the brunt now, there'll be others that they will move on to in due course.

In terms of the way TWE responds and how much value really is lost (temporarily anyway), I think this will be interesting. They alluded to looking at exporting more to China from New Zealand, US or Europe to avoid the tariffs (substituting their distribution channels) as well as looking for alternative markets. While Asia (mainly China) represents around 23% of sales revenue and 42% of EBITDA, it has been contributing something like 60-70% of the growth in the past few years. I doubt all of that goes to Zero (if so, fair value of the stock price will be in the $7s), so interesting to see how management can mitigate some of those impacts. At least they've got until Tuesday to work it out!

If you are a long term holder and can see through Covid and the China Trade issue, you may just see this as an amazing buying opportunity. DYOR