Is Australian Vintage Limited a better buy than Treasury Wine Estates Ltd?

Is Australian Vintage Limited a better buy than Treasury Wine Estates Ltd?

Credit: rob_rob2001
By Tim McArthur - August 27, 2015 | More on: AVG TWE
The performance of the two ASX-listed wine companies Australian Vintage Limited (ASX: AVG) and Treasury Wine Estates Ltd (ASX: TWE) has been starkly different this reporting season.
While Treasury Wine’s share price has rallied 6.7% since the release of its full year results on August 19, over the same period the share price of Australian Vintage has fallen 7.8%.
Here’s what Australian Vintage reported:

• Revenue increased 7.5% to $230.9 million reflecting higher branded sales
• The 3 key brands of McGuigan, Tempus Two and Nepenthe have grown 43% over the past 3 years
• For the 12-month period, McGuigan grew sales by 18%, Tempus two by 11% and Nepenthe by 25%
• Total branded sales now account for 72% of all sales across the group
• Adjusted net profit after tax (NPAT) down from $7.6 million to $7.1 million
• Net debt of $104.3 million
• No dividend paid for the year
• On a divisional basis, Australia grew packaged sales by 10%, New Zealand by 14%, North America by 26% with Asia providing a drag with a decline of 7%. Meanwhile, the UK/Europe division produced an overall sales gain of 12% thanks to a 16% increase in bottled sales which more than offset a 28% decline in bulk sales.

Outlook:
While Treasury Wine was upbeat about its outlook and particularly the growth potential in China, the outlook provided by Australian Vintage’s management was much more muted…
“We continue to face short term challenges due to our high cost from the 2014 vintage and the ongoing margin pressure” noted Chairman Richard Davis.
Despite a more sanguine outlook for Australian Vintage compared with that from Treasury Wine Estates, the current pricing of Australian Vintage’s shares compared to an assessment of their value is arguably a more appealing investment proposition.
http://www.********.au/2015/08/27/i...-a-better-buy-than-treasury-wine-estates-ltd/