Pfft, Goldman Sachs. The optionality of TWE is quite huge really - could become a takeover target (which would be a price substantially higher than todays, just look at Coca Cola went from $9s to $13s), could be an asset play (check out their land assets and inventory of grange), could find new markets (already happening to some degree), or trade with china may just get back to an even keel (likely, timing uncertain). Any or all of those things happen you get a share price above todays. GS are trying to predict where the price will go, rather than actually value the company.
Morningstar retain as of November 30th a fair price of $11. This has factored in a "cut in fiscal 2021 EPS forecast by about 16%--given the loss of more than half-year’s contribution from China--and fiscal 2022 by 22%, to AUD 53 cents". Their essentially banking on the high end products that were destined to China to go to other Asian markets where previously they were underserved. So even if China doesn't return before FY25, they reckon the Asian earnings will be at around $500m or -20%. Seems relatively reasonable to me.
I suppose we will find out more on February 17th when their interim FY21 results.
TWE Price at posting:
$9.84 Sentiment: Buy Disclosure: Held
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