2011 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of international wine group Treasury Wine Estates (ASX: TWE) with a Buy recommendation following its demerger from the Foster’s Group.

Research analyst Paul van Meurs said, “As a standalone company, we think Treasury Wine Estates is at the bottom of its earnings cycle and forecast a strong improvement over the next three years.

“We believe the business is in significantly better shape than it was before the wine review with further benefits as an independent company still to come. As a result, if macro headwinds turn into tailwinds, we see sizeable valuation upside in the stock.”

A structural separation of Foster’s wine business in May 2011 created two independent ASX listed companies – Treasury Wine Estates and Foster’s. Foster’s is Australia’s largest brewer while Treasury Wine Estates is an Australian headquartered global wine company with a significant presence in Australia, the Americas and Europe and a growing presence in Asia.

“We acknowledge that Treasury Wine Estates has a lot to prove to the market before it can claim to have turned the corner however we see a number of reasons to be optimistic.

“We think that there is valuation support at current levels from the tangible book value, potential interest to a financial buyer or even earnings multiples on normalised numbers. As a result, we see the risk/reward balance firmly to the upside,” Van Meurs said.

Key downside risks identified by the analysts include a continuing strong Australian dollar which may erode the group’s competitiveness in export markets and translate into lower offshore profits into Australian dollars; the supply/demand balance; corporate change and failure to see a consumer recovery in the major markets in which it operates.

For further information, please contact:

Deutsche Bank AG    
Name : Camilla Herring   
Phone: +61 (0) 2 8258 2731
E-mail: Camilla.herring@db.com