Treasury Wine Estates Ltd (ASX: TWE) shares aren’t joining in the broader market rally today.
Shares in the S&P/ASX 200 Index (ASX: XJO) global wine company closed yesterday trading for $11.18. At the time of writing, shares are changing hands for $11.03 apiece, down 1.4%.
For some context, the ASX 200 is up 0.4% at this same time.
The ASX 200 wine retailer has struggled since China imposed hefty tariffs on Australian wine exports in 2020. Those were implemented in retaliation for the Aussie government’s support of an international investigation into the origins of COVID-19.
As you can see on the chart above, Treasury Wine shares remain up 4% from their recent one-year lows, notched on 10 July. But the stock is down 16% in 2023. And well down from its pre-pandemic levels.
So, at $11.03 apiece, are Treasury Wine shares a smart buy for ASX bargain hunters?
Are Treasury Wine shares oversold?
For three years now, ASX 200 investors have been keeping an eye on Chinese policymakers to gauge when the punishing tariffs might be lifted.
With relations between the Aussie and Chinese governments improving over the past year, Catapult Wealth portfolio manager Tim Haselum (quoted by The Bull) said the market isn’t pricing in the possibility of those wine tariffs easing.
Catapult Wealth has a buy rating on Treasury Wine shares, with Haselum noting the company has managed to expand its sales beyond China since 2020.
“The wine company has found other global markets after China imposed hefty tariffs on imported Australian wine,” he said.
And that means this ASX 200 stock could be a bargain at today’s levels.
“In our view, investors have oversold the stock on what some consider a mixed or disappointing outlook,” Haselum said.
He added:
We believe the market is ignoring the possibility of China winding back tariffs on Australian wine. Treasury Wine and other wine companies may benefit if China reduces tariffs and trade resumes to meaningful levels.
Adding it up, Haselum concluded, “We believe Treasury Wine’s share price is trading at a discount.”
