Today, on 30th April 2019, AGL Energy Limited (ASX: AGL) released a presentation and speech that its Managing Director & CEO, Brett Redman will make at the Macquarie Australia Conference in Sydney. It will include reconfirmation of FY19 guidance, as stated in AGL’s H1 FY19 financial results, and commentary on market conditions for FY20.
As per the release, AGL Energy has been involved in a lot of merger/demerger and acquisitions since its inception in 1837. Some of them include Torrens Island Power Station and Powerdirect in 2007, as well as Loy Yang A Power Station and Mine in 2012, APG in 2013, and Macquarie Generation in 2014. In 2016, the group developed PARF, which is currently generating 808 MW of renewable energy. The development comes with a lot of challenges, which involves government policy and market design uncertainty; rising community expectations of large companies; ageing fleet and the need to decarbonise; and evolving customer needs. Amidst challenges, AGL still sees future opportunities, and it is forecasted that $130 billion grid-scale and $70 billion ‘Behind the Meter’ investment is required through to 2050. There is a vast scope of improvement in the technology for the new generation along with customer service.
AGL aims to optimise the existing portfolio for performance and value by upgrading security, efficiency and flexibility. The company has evolved and expanded into core energy market offerings, such as gas and renewables and storages. The company is looking to create new opportunities with distributed energies, such as home batteries, orchestration and e-mobility. AGL is also planning to offer data value streams, such as broadband and smart home for its customers.
The company’s FY2019 guidance remain unchanged, where underlying profit after tax (PAT) is expected to be in the range of $970 million to $1,070 million. The lower gas volumes will impact the second half due to seasonality, lower large business customer volumes, continued consumer margin compression due to lower-priced products, Victoria price change impact, and the higher input fuel costs.
The group expects to face some market headwind going into FY20, which involves a) A reduction in LREC prices along with the further fall during FY20, b) The wholesale prices for electricity forecast are expected to be lower on average than FY19, c) Higher coal and gas costs as legacy contracts will continue to mature, d) An expectation of partial re-regulation of retail electricity prices via DMO and VDO.
On the stock information front, at the time of writing (on 30th April 2019 AEST 01:30 PM), the stock of AGL Energy was trading at $22.240, down 2.456% with a market capitalisation of ~$14.95 billion. Its current PE multiple is at 11.91x, and its last EPS was noted at $1.914. Its annual dividend yield has been noted at 5.18%. Today, it reached day’s high at $22.790 and day’s low at $22.115, with a daily volume of 1,076,949. Its 52 weeks high price stands at $23.30 and 52 weeks low at $17.44, with an average volume of 2,066,301. Its absolute return for the past five years, one year, six months, and three months are 51.83%, 4.92%, 28.16%, and 5.65%, respectively.
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