Australian winemakers, such as Treasury Wine Estates, to benefit from game-changing China tariff removal. Plus wine prices to rise. This will be a turning point. The blossom of riper profits

The removal of Chinese tariffs on Australian wine imports is a game changer for the group, as it means it can return to elevated earnings growth and Chinese revenue growth, which previously accounted for 21-23% of revenue.

Over time as TWE reestablishes itself in China, expanding its brand and increasing investment and presence, it should materially add to earnings from FY 2025 and FY 2026. This is assuming the Chinese consumer adjusts.

This is at a time when wine production is expected to reduce to 60-year lows. So you should expect wine prices to increase. Right?

Plus, Treasury Wine Estates also announced it' going to lift prices of its top-tier Penfolds products. And this is all while TWE's new premium label is seeing greater sales in the US.

All in all, TWE's earnings and margins could comfortably improve.

Morgan Stanley reiterated Treasury Wine as an overweight stock with an A$13.75 price target, which assumes 10% share price growth is ahead in the year. Specifically, Morgan Stanely said TWE used to “make $200 million EBIT from China, if it can recover around 40% of this through volume and price then there's potential for some A$2.00/share upside to the stock price”

As a close of trade today consensus is for TWE' shares to hit $13.61 in year, vs today' close of $12.68, which implies a 7.3% return. CLSA has the most bullish price target of $17.00, followed by Jefferies with a $16.00 target.