What you need to know: • DWS has completed the early stages of a turnaround, returning to profitability, with 1,800 bps of gross margin expansion since FY23, reaching positive EBITDA in FY25, and largely decreasing its debt. • DWS is now posting revenue growth due to acquisitions, new product initiatives, its strong position in grocery and convenience, enhanced VQA rebates, and cider pricing reform. • Diamond is supported strategically by Lassonde Industries (LAS.A:TSX, $1.6B mkt cap) as its largest shareholder (~50%). Diamond Estates Wines & Spirits (DWS:TSXV, DWWEF:OTC) is a Canadian producer of premium wines and ciders and also acts as a national sales agent for a portfolio of third-party alcohol brands. With a portfolio anchored in Ontario and growing national distribution, the Company has established a strong presence in both the domestic and export markets. We believe DWS has reached an inflection point in its financial trajectory where revenue growth has returned, and margin expansion will continue to accelerate, supported by favourable regulatory tailwinds and a leaner operating model. We are initiating coverage on Diamond Estates with a BUY rating and a target price of $0.30/share. Investment Thesis Summary Progressing Turnaround Story. DWS has completed the early stages of a turnaround, reaching profitability and outpacing the industry with topline revenue growth. Gross margins have increased from 32% in FY23 to 66% in Q2/26 (ending September 30th), led by cost reduction measures and government support. We expect further improvements as DWS benefits from the full effect of its acquisitions and structural changes that improved capacity utilization driven by higher sales volumes. Additionally, debt levels (including debentures) have declined from highs of $32.4M in Q4/23 to $16.8M in Q2/26. Poised to Benefit Disproportionately from Industry Change & Government Support. DWS is positioned to capitalize on a series of tailwinds that support Ontario-made wine. With access to over 1,000 grocery and 4,200 convenience stores, enhanced VQA rebates, and margin upside from cider reforms, the Company is poised to drive significant high-margin growth after several years of non-core business dispositions leading to declining revenue. DWS grew sales by 21% YoY in H1, and we are expecting 17% sales growth in FY26 and 9% in FY27, as DWS maintains its leading market share in the expanding grocery channel. Strategic Ownership & Strong Management. DWS is backed by Lassonde Industries (LAS.A:TSX, $1.6B market cap), which owns 32.8M shares (~50%). This strategic alignment strengthens DWS’ positioning across grocery, big-box, and wholesale channels, while bringing valuable capital and operating expertise. DWS is led by CEO Andrew Howard with the support of CFO Basman Alias, bringing deep expertise in the Canadian wine industry, operations and companies requiring turnaround strategies. The remaining ownership is held by management (2%) and a mix of retail investors and small institutions (48%). Valuation. DWS currently trades at 6.1x FY27E EBITDA compared to small-cap peers at 8.1x and large-cap alcoholic beverage companies at 8.2x. We believe DWS is set up for multiple expansion as the turnaround results in topline growth and operating leverage takes hold. We also view DWS as a takeout target given its strategic assets and relationships.