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Feb 16 • 17 tweets • 6 min read
Treasury Wine Estate $TWE $TWE.AX 1H22 results have come in well above consensus, popping +10% today despite:
🚨Revenue -10.1%
🚨EBITS -6.7%
🚨NPAT -5.3%
Let’s take a look 👇
1. TWE was a Classic case of heads I win (China not so bad, find alternative markets), tails I don’t lose ($8-9 asset values incl. under reported land and inventory).
Here’s the previous earnings updates and original deep dive:👇
2. The 1H22 results look terrible.

Look, every number is down down down. Yet, stock price up +11.39% right this moment 🤷
3. I actually don’t disagree with EAD – “puzzling” may be a generous way of putting it
4. Yet looking at the results excluding China, the business is firing on all cylinders

Revenue up, margins up, and their US business is becoming a beast.
5. And there’s still more up side, as we move to a post-covid world we will see more sales channels opening up.
6. David @berthon_jones (massively underfollowed btw) outlines the “heads I win” argument. The recovery is happening faster than expected and China is probably already factored in.
8. One itch I have with these results is the Frank Family Vineyards. So I backed out the ~$20m EBITS accretive in the half from the US segment.

EBITS aren’t +32.1% organic, they’re closer to 16%. Americas aren’t up 46%, but closer to 12% organic.

9. You can see the America’s in detail here, but they failed to mentioned the Frank acquisition.
10. A key tenant of my thesis is the value of the Penfolds grange in the cellars.. And wow, that has only gone up according to the Liv-ex Fine Wine 100 index.

Unsurprising that asset price inflation has been hitting the wines. Next will be scotch, cigars, and fatcats.
11. Despite the increase in wine valuations, for TWE it’s booked based on the cost of production.

So you can see a $80m reduction of non-current inventory, which makes no real sense. It's probably +$200m on market valuations.
12. Tim Ford flagged a pretty positive outlook from here – excluding China due to trade complications, of course.
13. From a technical, we’re bang on that support zone as @ElephantCapita2 highlights.
14. Overall, I hold and wait for something meaningful to happen.

I don't really understand the 10% pop, but hopeful for Covid channels to reopen, China to come back, or even takeover bid.
If you enjoyed this, bash the like / retweet / follow buttons.

A deep dive per fortnight is my commitment to FinTwit.

Questions and feedback always welcome. DYOR.

Disclaimer, I'm long TWE.
If you didn't see the link to @berthon_jones blog, it's really good and you can find it specifically here:
aequitasinvestments.com.au/2022/02/16/twe…
@lachlanbjensen and my bromance started over a FinTwit debate on TWE. And just as the "share price has aged like a fine wine this morning after announcing its half-year results for FY22", so to has his analysis. 🎯
raskmedia.com.au/2022/02/16/tre…

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Feb 17
Lark $LRK LRK.AX is an award winning whiskey distilling company based out of the beautiful Tasmania that’s been in the news for all the wrong reasons. Does yesterday's 20% drop in the share price give us a buying opportunity?

Let’s take a deep dive. 👇 Image
1. Investment thesis: Asset play.
✅Award winning whiskey
✅Growing asset base through acquisitions
✅Growing revenues with positive earnings
✅Valuations at or below net tangible assets
❓Risk of new management & Bill Lark
2. Lark was set up by Bill Lark, the ‘Godfather of Australian Whiskey’ who was inducted in the Hall of Fame in 2015.

Only 1 of 7 people outside of Scotland to claim that feat. Image
Read 25 tweets
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Feb 15
Tassal $TGR.AX $TGR half year results out and they didn’t disappoint 🤯
✅Revenue +43%
✅EBITDA +25%
✅NPAT +31%
✅FCF +137%

Let’s take a look 👇
1. But first, you can find my previous updates and the original deep dive all linked through here.

If you don’t want to look at the entire thread, the original is in my index of deep dives on my pinned tweet.
2. The three components of my investment thesis
✅Cyclical (salmon) – peaking now but expecting to stay elevated
✅FCF conversion (prawns) – on track as CAPEX reduces
✅Valuation – remains cheap relative to peers
Read 22 tweets
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Feb 14
The global water and wastewater industry was worth US$260bn in 2020, growing at a healthy 7% CAGR. Australian technology is well positioned to benefit, but are Australian companies?

Let’s take a look at Fluence $FLC $FLC.AX
Phoslock $PET $PET.AX and Calix $CXL $CXL.AX 👇
1. Tl;dr – De.mem $DEM $DEM.AX is still my #1 pick. The sector passes my baked beans hurdle (growing +4% CAGR), and De.mem have a good business model. Just not sure on their operating leverage?
You can check out the most recent deep dive here:👇
2. Fluence $FLC $FLC.AX builds decentralized water treatment plants around the world. With over 300 projects under its belt, it has a proven track record in delivering.
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Feb 12
Things are about to get reel interesting in the Salmon World.🐟

European inventories are depleted, demand keeps increasing, and supply is contracting. We're up ~40% from the start of the year, and prices have hit 100NOK in China! Image
"The salmon price is speeding away - towards the highest level of all time"

"Faroe islands, Scotland, Chille, Norway - they all have shortages. It is a perfect storm". <-Music to my ears. Image
They're all up 10%, 15%, 20% over the past month:
👊Mowi $MOWI
👊Bakkafrost $BAKKA
👊Leroy $0GM2
👊SalMar $SALM Image
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Dec 16, 2021
Food security and fertilizers are back in the media again for all the wrong reasons. Farmers on tik-tok say the world is about to end, and fertilizer prices are going bananas. So what’s the play on the ASX?

Let’s take a deep dive. 👇
1. Food security as a megatrend is driven by population and wealth increases with limited resources.

I look to invest in:
1⃣Owning primary factors of production (food, water)
2⃣Owning low-cost food producers
3⃣Ag Tech companies, or
4⃣Commodity inputs like Fertilizers
2. Fertilizers are the primary nutrients that spur plant growth necessary for crop production and livestock (e.g. feed and hay).

There are three chemical compounds each with their own market:
🌱Nitrogen
🌿Phoshporous
🌳Potasium
Read 25 tweets
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Nov 25, 2021
Angel Seafood $AS1 $AS1.AX is the largest oyster producer in Coffin Bay, making news for all the wrong reasons. A real microcap seeking to build scale, is now the time to swim against the tide? 🦪

Let’s take a deep dive. 👇 Image
1. Investment thesis: Fast Grower.
✅Strong market for oysters
✅Revenue ramping up
✅CAPEX pulling back
✅Biomass in place for scaling
✅Skin in the game
🚨Food poisoning / sales suspension
2. Recently I looked at East 33 $E33 as an oyster play – sorry folks, it was a ruse!

That was my competitor research on Angel, which has taken a lot longer to get my head around due to the lack of information available.
Read 26 tweets

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