The Treasury Wine Estates Ltd (ASX: TWE) share price is up 1.24% on Friday to $11.43 amid news of positive talks between the Chinese and Australian Governments on trade matters.
Prime Minister Anthony Albanese has met with Chinese Premer Li Qiang on the sidelines of the East Asia Summit in Jakarta.
AAP reports that Albanese described his discussions with China's premier as "frank and constructive".
Albanese said:
Australia seeks to work towards productive and stable relations with China based on mutual benefit and respect.
The co-operation and engagement between our two countries is always improved when there is dialogue, when there's discussion. That's how you get mutual agreement.
China recently lifted its tariffs on Australian barley, but the tariff of up to 212% on Australian wine, imposed in November 2020, remains in place.
Albanese specifically commented that he and Chinese officials were working on resolving the wine trade blockage.
He added:
That essentially is how the barley issue was resolved in the interest of both of our countries.
It was acknowledged that we have an interest in working these issues through.
Albanese has taken up an invitation from President Xi Jinping to go to Beijing before the end of 2023.
The Treasury Wine share price dived in early November 2020 when the wine tariff was announced.
At the time, China was a very important market for Treasury, as well as other Australian winemakers.
In particular, Chinese consumers loved Treasury's premium Penfolds brand.
Since 2020, Treasury Wine has diversified its customer markets throughout Asia and in the United States.
It also set up vineyards in China to get around the tariffs.
If China were to lift the tariffs, it is unclear how that might affect the Treasury Wine share price today given the company has essentially replaced the Chinese market with other customers.
If China lifted the tariffs, Treasury Wine has said it would want to sell its wines there again but it would take time to lift production to meet that demand.
Back in April, Treasury Wine CEO Tim Ford said the company had "plans and strategies in place" so it could respond quickly if China were to lift the tariffs.
Image source: Getty Images
Is it time to buy Treasury Wine shares?
Here at The Fool we recommend that investors make ASX shares purchasing decisions based on fundamental analysis of companies.
Buying Treasury Wine on the basis that there may be share price growth if China possibly lifts tariffs is a pretty flimsy reason to consider the ASX wine share for investment.
However, one top broker says the company is a buy based on its merits right now.
Goldman Sachs thinks the Treasury Wine share price today offers good value to investors given the company's positive earnings growth outlook.
Goldman says:
Based on management track record re-basing the business post China tariff implications, we believe the company will deliver and look for FY23-26e sales CAGR of 6.8%, EPS CAGR 9.3%, in-line with its guidance of sustainable top-line growth and high-single digit average earnings growth over the long-term.
The broker has a buy rating on Treasury Wine and a 12-month share price target of $13.40.
What's the latest news from Treasury Wine?
Treasury Wine released its FY23 full-year results on 15 August, revealing a 3.3% decline in its net profit after tax (NPAT) to $254.5 million.
Penfolds was a stand-out in terms of sales, up 14.2% to $364.7 million in EBITS and accounting for almost 63% of the company's earnings.
Despite the profit fall, Treasury Wine raised its final dividend for FY23 by 6.25% compared to FY22.
The company will pay 17 cents per share, fully franked, on 3 October.
