Buffett Style Valuation

So, Warren Buffett has written extensively that a business should be valued on 3 factors:

1) What it has (e.g. cash, assets etc)
2) What it will earn (e.g. stream of future earnings, earnings potential, pricing power etc.)
3) What it will do (e.g. destroy value or create more value)

In this post I am only trying to determine point 1.

In the 2020 Annual Report, it states that TWE controls 12,850 hectares of land, of which 3,263 is leased. So 9,587 hectares owned.

Vineyards, because of their location (temperate, rainfall, soil etc), trade for between $100,000 to $225,000 per hectare. (https://winetitles.com.au/values-rise-as-competition-for-australian-vineyards-and-wine-assets-intensifies/)

So A) land on the balance sheet is worth between $1.4 Billion to $1.9 Billion. Of course, that land is not empty but contains assets e.g. buildings, equipment etc.
So B) buildings, plant and equipment is worth approx. $190 million (FY2020 net of depreciation shows $173m + 19m = $192 million)

Now here comes the hard part - what is the wine on the balance sheet worth.



We know that it costs $30-40 to produce Grange but they trade for $400-700+ depending on age.
TWE measures wine inventory at cost.

If 84% of the non-current inventory of $1,059.2m is worth an average of $175 per bottle (??) the market value of the non-current inventory is as follows:

84% x $1,059.2m x 175/30 = $5,190 million.
13% (masstige) x $1,059.2m x 50% gross profit margin = approx. $68 million
3% x $1,059.2 x at cost = $32 million

So C) the NON-current inventory in my view is worth $5.29 Billion.

TWE's gross margin is around 44%. This means the market value of the current inventory is approximately $2,311 million.

So, D) the current inventory is worth around $2.3 Billion.

And finally, E) the company has $449m of cash + $553m of receivables + $74m assets for sale - $682m payables - $23m tax payable -$1,702m long term debt. All of this equates to ($1.33 Billion)

Yes, China is important, butpoint 1 alone is $11.58 PER SHARE!

The ongoing business, earnings stream, pricing power, brands are all rtrading for FREE.