Ouch, this could get ugly. I have tried to investigate the...

Ouch, this could get ugly.

I have tried to investigate the figures to see where the bottom could be if you just removed China from TWE and then made some basic assumptions of growth, China coming back online, etc. Not pretty reading.

Free cash flow pre-Covid was around $380m p/a, and reduced due to Covid to $340m p/a. But if you take out 75% of 'Asia' region of revenue for China (there is a small amount for South East Asia, etc - lower margins though), then FCF is somewhere between $260m pre-Covid and $223m post-Covid. And while that takes into account the revenue loss and the shrinking margins, it doesn't account for lost potential growth in the future. So somewhere around $5 is the value of TWE ex-China using a back of the envelope discounted cash flow analysis based on slightly less than pre-Covid growth levels.

Be interesting to see what the 'Deep Value' folks would estimate TWE at, just looking at the terminal value. After all, there are billions of dollars of Penfolds in cellars, and some lovely wine estates around. That's got value of around $4b, while current market cap is around $8b. Still pretty ugly reading then.