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Australiaâs energy sector continue to undergo disruption driven by technology change, an accelerating shift to renewables and increasing customer engagement, said AusNet Servicesâ Chairman, Peter Mason at the companyâs AGM. In light of above statement, letâs look at the performance of five utility sector players.
AGL Energy Limited (ASX:AGL)
A leading integrated energy business, AGL Energy Limited (ASX: AGL) has unveiled its FY19 results today (8th August 2019). Importantly, the company reported statutory profit after tax of $905 million and statutory EPS of 138 cents in FY19, both down by 43% as compared to FY18. Higher forward electricity prices was the chief reason behind this decline.
Following the release of results, the companyâs stock witnessed a decline of 4.6% during the intraday trade.
Despite operating in a challenging environment, the company was able to report 2% growth in its underlying profit after tax, reaching $1,040 million in FY19, primarily driven by electricity portfolio.
FY19 Results Snapshot (Source: Company Reports)
In FY19, the company declared a dividend of 119 cents per share, including the final dividend of 64 cents per share declared with the full-year result, which is scheduled to be paid on 20th September 2019 to shareholders registered as at 22nd August 2019.
FY19 was a year of record levels of investment by AGL. The companyâs capital expenditure for the year amounted to $939 million, reflecting increased year-on-year investments the company is making to keep its ageing thermal plant operational and its investment in the new projects.
The company has been able to maintain a strong balance sheet, consistent with the Moodyâs Baa2 credit rating, with gearing of 23.5% at 30th June 2019 and ample headroom coming into FY20.
The company redeemed $650 million worth of subordinated notes on 11th June 2019, using cash reserves and existing bank debt facilities. In order to return excess cash to shareholders, the company has announced an on-market share buy-back for FY2020.
Outlook for FY2020: The company expects FY2020 to be more challenging and results are expected to be affected by lower wholesale prices for electricity and renewable energy generation certificates, increasing costs for coal and gas as legacy contracts roll off, and the re-regulation of retail electricity standing offer pricing. The underlying profit after tax in FY2020 is expected to be in the range of $780 million and $860 million.
Due the transition of energy market and present short-term challenges, the company is now focusing on effective capital allocation and business optimisation.
Stock Performance: In the past six months, AGLâs shares have provided a negative return of 5.21% as on 7th August 2019. At market close on 8th August 2019, AGLâs stock was trading at a price of $19.080, with a market capitalisation of circa $13.12 billion. The stock has 52 weeks high price of $23.210 and 52 weeks low price of $17.440, with an average volume of ~2,166,249.
APA Group (ASX:APA)
APA Group (ASX: APA) was recently granted a Survey Licence by the Government of Queensland for its proposed Galilee Moranbah Pipeline, which is expected to connect Queenslandâs Galilee Basin to gas markets.
In the first half of FY19, the company earned a revenue of $1,012.9 million, which was 6.1% higher than the previous corresponding period. The increase in the revenue was due to the contributions from number of recently completed projects. The company reported 4.3% growth in its FY19 EBITDA, reaching $787.7 million. The net profit after tax in FY19 was $157.4 million, up 27% on pcp.
1H FY19 Results Snapshot (Source: Company Reports)
Based on the current operating plans, it is expected that the companyâs EBITDA in FY19 will be in the region of $1,550 million to $1,575 million, with net interest costs expected to be between $500 million to $510 million.
In May 2019, the company announced the appointment of its new CEO and MD, Rob Wheals. Earlier, Mr Wheals was serving as APAâs Group Executive Transmission.
Stock Performance: In the past six months, APAâs shares have provided a return of 15.41% as on 7th August 2019. At market close on 8th August 2019, APAâs stock was trading at a price of $10.920, with a market capitalisation of circa $12.81 billion. The stock has 52 weeks high price of $11.740 and 52 weeks low price of $8.370, with an average volume of ~2,124,521.
Meridian Energy Limited (ASX:MEZ)
One of the leading power companies in New Zealand, Meridian Energy Limited (ASX: MEZ) recently released its monthly operating report for June 2019. As per the report, Meridianâs New Zealand customer connection numbers increased by 0.3% during June 2019 and increased by 4.0% as compared to the previous corresponding period. Retail sales volumes in June 2019 were 9.1% higher than pcp.
Meridian's Nz Customer Connections (Source: Company Reports)
In its report, the company also released some market data, as per which, the national electricity demand in June 2019 was 1.9% lower than the same month last year. June 2019 witnessed a slight rise in near term ASX prices as national storage declined.
In June 2019, the companyâs subsidiary Powershop Australia entered into a multi-year agreement with Kogan.com Limited, to provide competitive power and gas services to Australian households under Kogan Energy Brand.
Stock Performance: In the past six months, Meridianâs shares have provided a return of 33.56% as on 7th August 2019. At market close on 8th August 2019, Meridianâs stock was trading at a price of $4.670, with a market capitalisation of circa $11.74 billion. The stock is currently trading near its 52 weeks high of $4.850.
AusNet Services Limited (ASX:AST)
AusNet Services Limited (ASX: AST) was able to decrease its operating expenses in FY19 by $40 million. Although the company recorded a 12.9% decline in its FY19 NPAT and a 10.7% decline in PBT, AusNet decided to pay a dividend of 9.72 cents per share for the year, which is 5.1% higher than pcp. Further in FY2020, the company expects to pay a dividend of 10.2 cents per share, which will be 5% higher than FY19 dividends.
The company expects that Regulated Asset Base will grow around 3% per annum to FY22.
Stock Performance: In the past six months, ASTâs shares have provided a return of 3.76% as on 7th August 2019. At market close on 8th August 2019, ASTâs stock was trading at a price of $1.800, with a market capitalisation of circa $6.62 billion. The stock is currently trading near its 52 weeks high price of $1.995.
Mercury NZ Limited (ASX:MCY)
Mercury NZ Limited (ASX: MCY) acquired ~4,000 fewer customers in 2019 June quarter as compared to pcp. In April 2019, the company revised its FY2019 EBITDAF guidance from $515 million to $495 million, mainly due to an expected 150 GWh reduction in full year forecast hydro generation.
MCYâs Six months Stock Performance (Source: Company Reports)
Stock Performance: In the past six months, MCYâs shares have provided a return of 34.57% as on 7th August 2019. At market close on 8th August 2019, MCYâs stock was trading at a price of $4.710, with a market capitalisation of circa $6.42 billion. The stock is currently trading near to its 52 weeks high of $4.800.
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