What is driving the share price of Marlborough Wine Estates (NZX: MWE)?

Marlborough Wine Estates Group Limited (NZX: MWE) is a NZ based company that operates vineyards in Awatere valley and targets premium wine market.

Source: Shutterstock

Marlborough shares have soared by 150% since the month of December 2020.

On 7 January, at the time of writing, Marlborough was trading at $0.55, up by 7.84%.

Price Enquiry by NZX

The Group received a letter related to price enquiry from NZX Limited on 6 January 2021. The letter was with respect to  the continuous disclosure obligations set out in the Listing Rule 3.1.1 which requires issuers to immediately disclose any material information to NZX.

ALSO READ: Why did Marlborough Wine Estates (NZX:MWE) ended 8% up on NZX today?

MWE shares price rose from $0.32 on 18 December 2020 to $0.51 on 6 January 2021, up by 59.4%. NZ RegCo wanted to inquire if the rise in share price was compliant with the Listing Rule 3.1.1.

On 7 January 2021, MWE wrote to NZX that it continued to comply with the Listing Rules.

Key Performance highlights

MWE sailed well through COVID-19 impact and posted its first profitable financial year. The Group posted its first profitable financial year since becoming an NZX-listed company.

Some of the performance highlights of MWE included the following:

  • Gross harvest tonnage of MWE for the 2020 vintage stood at 1,911 tonnes of grapes, up from 1,861 tonnes in 2019 vintage.
  • Case sales in FY ended 30 June 2020 was roughly 28,000 cases, up from nearly 16,400 cases in the FY ended 30 June 2019.
  • MWE’s domestic sales also rose by over 90% by FY20 end compared to previous financial year.
  • The Group also received its first listing in Countdown and there will be a lot of opportunities to grow in the second-largest retail chain of New Zealand.
  • MWE is setting new records in monthly revenue during H1 of FY21.

Source: Shutterstock

The Group’s focus has been on international market development. MWE plans to further develop the Australia and Canada markets, and establish new business in the US and UK markets.

MWE settles with its insurance company regarding inventory loss

On 21 December 2020, MWE also agreed to a deal with its insurance company concerning the inventory which was lost in FY20 under the control of MPI.

MWE's previous contractual wine processor, as previously advised to the industry, failed to comply with the Wine Act specifications. The implied loss of inventory was written off in FY17, which was worth $1.2 million. The Processor has been liquidated now.

The deal enabled MWE to recover a proportion of value that was written off.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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