Thanks T.E.P for starting this thread, great to see some...

Thanks T.E.P for starting this thread, great to see some fundamental and technical analysis being presented.

It was useful to see your calculations, and clearly the market is already factoring in ex-China. My estimate for TWE's stock price completely ex-China (which is an unlikely situation as there will be some revenues) is a bit lower than yours. Using a discounted cash flow approach of TWE ex-Asia, I have estimated a value of around $7-7.70 per share.

The main reason that my estimates is lower than your $9 estimate is that using revenue/EBITS is assuming a linear growth. Or put another way, that the US, Australia, China, etc are growing at the same rate. This is clearly not the case. Looking at the FY19 report, you will see the segment data broken down from FY15-19. During this period, Asia grew EBITS from around $60 to c.$300m (x4.5); whereas Americas were $75m to $225m (x3) and ANZ were $80m to $160m (x2). The DCF modelling I undertook considered the different growth rates, and thus was more bearish in the forward estimates. The range of $7 to $7.70 is because better to be approximately right than precisely wrong.

I do not however believe that TWE is worth $7 to $7.70. First, there is value in Asia beyond China, though you can't break it out from their reporting as they don't do country-specific segment data. Second, it's unlikely China will go to 'Zero' because some people will be willing to pay the tarriffs, but also because on Tuesday I suspect TWE management will elaborate how they will try to circumvent the tariffs (e.g. selling from US, Europe or NZ wineries; or comically putting grange in 2L+ casks). Third, TWE may also be able to substitute to alternative markets, albeit likely at a lower margin. Fourth, the advantage of wine is that it appreciates as an inventory in storage, so there could be increasing inventories while this trade saga continues. Finally, it's important to remember that this is a temporary measure, while there is a lot of uncertainty in the timing there is some discounted value in the future of China returning as a significant market to TWE. A best case scenario may be $5-6, though it's likely to be lower particularly in the short term. The patient long term investor that doesn't have to report monthly portfolio results will be well placed to benefit from this.

@Pat07350 mentioned Jun Bei Liu of Tribeca's assessment based on asset value, and @2sigma also looked at this. Essentially, there is a lot of value in TWE in the land, plant & equipment, inventories (largely appreciating premium wines), net cash, as well as intangibles (brand value, goodwill). For those interested, check out the TWE forum on 'Buffet style evaluation'. Taking asset values as essentially a floor to the price as it's unlikely to see TWE trade below net asset value for very long, this is worth at least $7. In addition, you could add a few dollars of value taking potential future earning value. My reckoning is that if one was a corporate raider and looked at buying out TWE, the starting price could be as low as $10 but the final price is unlikely to be below $12 even with the current issues.

It'll be interesting to see where the price goes next week. Clearly there is momentum downwards, but I also reckon there is enough interest at sub $8 I do not think it would go there for very long. We saw this happened just recently with the official announcement from China that it dropped to $7.70s but then bounced up 9 and then on to $10.50 pretty quickly. This time though, it may not bounce back as quickly...