AGL - orig. The Australian Gas Light Co. Now one of Aussies biggest energy providers

[peat]

So I couldnt find a thread on AGL so I've started one and I'll paste the relevant posts from the Power Shares thread




I know its on the ASX but AGL is on my list of power companies. And it announces half year on 11/2

It recently lowered its forecast guidance down to $500 m underlying for this FY. (ending June)
But this is still something around $.77 per share and it has div policy of 75% of underlying and it has mooted paying special dividend up to %100 of underlying profit for the next couple of years since it is cash rich.

so .77 / 11.55 = nearly 7% yield


Nice yield, horrible downtrend. :scared:

[peat]

At first glance AGL looks "OK", here is a recent review of their power generation assets I did:
12275

12276

Their renewable assets initially look substantial, even if it is only a comparatively small proportion of their portfolio, the problem is that when you look closer into the ownership structure of their renewable assets, you will find that QIC Global Infrastructure Fund actually own 80% of most of their renewable assets and AGL only own 20%.

This makes my initial pie graph above incorrect as AGL's power generation assets "owned" by them are actually more like the below graph:

12277

AGL is basically a coal/gas power generator with diminishing returns, I believe AGL is a value trap if you are going long, especially with their upcoming large generation asset closures. However, there is potential for a short term trade on a confirmed reversal of trend which I am waiting for.

Thanks Norwest I appreciate your comments.

[peat]

Yesterday they wrote of a few billion.
http://research.iress.com.au/IDS/old/20210204/02337704.pdf?uid=6D40CA2EFD42759ACD2D4A47EF318F7E7 839000026B497501599E540093D250091850000&ppv=

An awesome start to my involvment with this company. :scared:

AGL Energy Limited (AGL) has today announced it intends to recognise charges of $2,686 million (post-tax)in its financial statements for the period ended 31 December 2020. These charges reflect $1,920 million in provisions for onerous contracts related primarily to legacy wind farm offtake agreements, increases toenvironmental restoration provisions of $1,112 million, and further impairments of $532 million across AGL’s Generation Fleet and Natural Gas assets, net of a positive tax effect of $878 million.


However note that this has not changed the forecast guidance for the current year ending June. Presumably dividend estimations have not changed either.
So yield (or value trap as Norwest points out ) remains a plus.


I also note today that Moodys Investors Service has today affirmed AGL Energy Ltd's Baa2 long-term issuer, senior unsecured and senior unsecured bank credit facility debt ratings. And outlook remains stable. There are a some positive comments in their report which one may latch onto.
https://www.moodys.com/research/Moodys-affirms-AGL-Energys-Baa2-ratings-outlook-remains-stable--PR_438734?cid=

[Snoopy]

Yesterday they wrote off a few billion.
http://research.iress.com.au/IDS/old/20210204/02337704.pdf?uid=6D40CA2EFD42759ACD2D4A47EF318F7E7 839000026B497501599E540093D250091850000&ppv=

An awesome start to my involvment with this company. :scared:

AGL Energy Limited (AGL) has today announced it intends to recognise charges of $2,686 million (post-tax)in its financial statements for the period ended 31 December 2020. These charges reflect $1,920 million in provisions for onerous contracts related primarily to legacy wind farm offtake agreements, increases toenvironmental restoration provisions of $1,112 million, and further impairments of $532 million across AGL’s Generation Fleet and Natural Gas assets, net of a positive tax effect of $878 million.


This is quite extraordinary Peat. How did all their purchasing from a clean green wind energy source go so wrong? And who was on the other side of the contract, the outfit from which they bought their green energy? Whoever it was that stitched up AGL, those might be the guys to invest in!

SNOOPY

[kiora]

Couldn't find them with quick search but
"The ASX has a smattering of renewable energy stocks worth a look. According to the IEA report, wind and solar stocks lead the renewable energy sector right now. A few ASX entries are already generating revenue and profit while others are in earlier stages of development.

In the first table we look at two diversified utilities with renewable energy assets – Origin Energy (ORE) and AGL Energy (AGL) – along with the few pure play renewable energy offerings currently generating both revenue and profit."
https://thebull.com.au/renewable-energy-in-the-post-covid-19-era/

[Norwest]

Then Queensland Government, via QIC Global Infrastructure Fund's subsidary PowAR bought the 80% controlling state off AGL's in 2016 that have the other side of the contracts. AGL are actually losing money from this offtake agreement with each unit they take off PowAR, and they have to take it. Unbelievable.

Snoopy thats the first thing I looked at when investigating AGL, is to see if I could buy into QIC.

AGL Dipped into $10's today, next stop $9...

[Snoopy]

Then Queensland Government, via QIC Global Infrastructure Fund's subsidary PowAR bought the 80% controlling state off AGL's in 2016 that have the other side of the contracts. AGL are actually losing money from this offtake agreement with each unit they take off PowAR, and they have to take it. Unbelievable.

Snoopy thats the first thing I looked at when investigating AGL, is to see if I could buy into QIC.


I can't stand the suspense! Were you able to buy into QIC?

SNOOPY

[Norwest]

I can't stand the suspense! Were you able to buy into QIC?

SNOOPY

Unfortunately no, it's not publicly traded and I could not find a fund from the institutional investment firm's are that are backing them - if you could find one I would be very interested.

[Norwest]

AGL Dipped into $10's today, next stop $9...

AGL falling heavier and faster than even I thought, opened today at $9.650. Ouch.

[Snow Leopard]

It went ex-div today, so it was flat-ish adjusting for the dividend.

But where is will go next, I have no idea.

[Snoopy]

How did all their purchasing from a clean green wind energy source go so wrong?


CEO, Mr Brett Redman, answered this question in the February 11th Half Year result conference
(p3 of transcript)

"I’d now like to look in more detail at market conditions. Spot and forward electricity prices have decreased rapidly to levels unseen since 2015. On the one hand, supply has increased as a result of new grid-scale and rooftop renewable generation combined with the deferral of major planned outages at thermal plant as a result of COVID-19. On the other hand, demand has fallen due to mild weather and COVID-19. La Nina has created an unusually cool summer, particularly in December."

The above comment strikes me as odd. It implies the thermal generation plant that was due for maintenance could not be turned off in times of excess supply.

(p3 of transcript continues)

"We expect a sustained impact to long-term wholesale energy prices reflecting policy measures to underwrite new build of electricity generation and lower technology costs, leading to expectations of increased supply.
This lower price environment will put pressure on existing generation in the market, while new generation build will increasingly rely on government contracts. Amid these conditions, in the near term we expect to see further margin compression as our historic hedge positions roll off."

It sounds like individual rooftop solar installations on a large scale are making a real difference to electricity supply. Of course solar power generation makes more sense in Australia than NZ, as production and consumption are better aligned. It is curious though, that construction of renewable power stations seems to to be driven by government, not the power industry.

(p12 of transcript)

"I want to conclude by looking at the historic relationship between EBITDA and Wholesale Electricity prices, to help put more context about our outlook beyond this year. Wholesale Electricity prices are the biggest driver of AGL’s profitability – and you can see from the chart to the right that there is a strong correlation between the price trend (both up and down) and AGL earnings. The steady rise that occurred from FY15 to FY18 translated into record profits in FY19, and the decline we’ve seen since is now translating to much lower earnings this year and into the next couple of years. Markus (Brokhof, Chief Operating Officer) has taken you through our hedge book in more detail, from which you can see that our progressive hedging approach smooths our earnings outcomes, both downside and upside."

"The chart here shows that wholesale prices are at levels last seen in 2015, hence it is likely earnings will follow."

(p21 of transcript).

"One last reflection too, on the impairments that we took around the wind contracts. An acid test is always, if you could go back in a time machine, would you have entered into those transactions. And the answer is yes. If you look at the whole of life economic outcomes that we achieve through that wind development, the results and the profits that we made in the earlier parts, the last few years where green prices and black prices have been a lot higher, in some respects what we’re seeing is a little bit of disconnect to the phasing of when costs and profits are booked versus the actual economic outcomes of projects. So do I, on behalf of the company, regret those wind projects from a decade ago? No. I think they did what they set out to do. They established a renewables and wind industry in Australia. They did provide good returns over the years to our shareholders. And I think for the whole of life, they’re not absolute knock it out of the park returns by any means, but they are respectable on the way through, so the impairment is not good, but the whole of life economic decisions there are not bad."

The question that wasn't answered, and is not company specific, is why did the Wholesale Power price collapse post 2018? The hint is that new generation is being underwritten, regardless of market price indicators.

The lesson here is, could the same fate befall Genesis Energy on the NZX, which like AGL, is primarily a fossil fuelled company with rent-a-green generation assets and concomitant contracted power pricing? The answer is, because wholesale power prices do go up and down, this is exactly what will happen to GNE. It is merely a matter of 'when'.

SNOOPY

discl: do not hold AGL or GNE

[Davexl]

Here's a bigger battery being built by AGL in Aust.

https://www.smh.com.au/business/mark...=p52nhq#p52nhq (https://www.smh.com.au/business/markets/asx-set-to-rise-suncorp-flags-250m-buyback-as-profits-leap-20210809-p58gzj.html?post=p52nhq#p52nhq)

AGL taps Finnish firm to build battery ‘about the size of the Adelaide Oval’ By Nick Toscano

AGL, the nation’s largest greenhouse gas emitter, has selected Finland’s Wärtsilä to kickstart the roll-out of several big batteries around the country with the construction of a 250-megawatt battery at the Torrens gas plant in Adelaide.
The ASX-listed power and gas supplier on Monday said the grid-scale battery, expected to be around the size of Adelaide Oval, would initially have one hour of storage (250 megawatt-hours) but could expand to up to four hours (1000 megawatt-hours).

Construction of the battery is scheduled to begin later this year.“Torrens Island has played an important role in the state’s energy generation for many decades,” AGL chief operating officer Markus Brokhof said.
“Our plans ensure the site’s legacy continues with smart and sustainable technologies.”

AGL last month announced it was preparing to mothball one of four units at the Torrens gas-fired generator due to “challenging conditions” caused by the state’s accelerating uptake of renewable energy continuing to price fossil fuels out of the power market.

(Also caused by rapidly increasing maintenance cost as the coal fired plant ages eg Huntly)

Average wholesale power prices in South Australia fell sharply last year, from $122 per megawatt hour in 2019 to $51, according to the Australian Energy Regulator, which attributed the fall to high levels of rooftop solar generation and mild summer conditions.
In the first three months of the year, the average cost of power per megawatt-hour fell below $0 between 10am and 3.30pm, when rooftop solar is a major contributor to the grid.

In Australia and worldwide, battery technology is emerging as key to supporting the greater uptake of renewables by overcoming the problem of intermittency when it is not sunny or windy.

Big batteries capture and store excess power created during times when conditions for renewable energy are most optimal, and then release it when it’s needed during peak-usage periods such as during heatwaves (In Aust) or freezing winters (in NZ)

AGL’s Torrens battery will be the first of a planned 850 megawatts of batteries the company has vowed to roll out across the nation.
Rival power giant Origin Energy has also unveiled a plan to build a 700-megawatt battery at its Eraring coal-fired power station in NSW, which will be the country’s largest.

[Ferg]

Where is the bottom for AGL? Whilst the historic yield is tempting, they have just announced a dividend cut. Whilst I don't like these robo-generated articles, this one talks about the dividend cut and lower dividends in future: https://nz.finance.yahoo.com/news/return-trends-agl-energy-asx-152646053.html

I see a hard road ahead for AGL. A high yield is not worth as much as a falling EV and/or SP.

[Norwest]

The erosion of AGL shareholder value over the last 18months is outrageous. To put it into perspective it is now down over 75% compared to the ASX200 in just one year.

Still on a massive downtrend which I've been watching for a reversal which just doesn't want to happen. The volumes on down days is a telling story in and of itself.

The market has zero faith in the board and in my opinion rightly so.

[Waikaka]

Happy to start accumulating from here

Plenty of headwinds for the next few years but I expect higher gas and coal prices as well as planned thermal plant closures to eventually flow through to higher wholesale electricity prices.

AGL has a decent moat with their own mines or long term cheap coal contracts.

Figure by 2025 things will have stabilised and happy to clip the dividend ticket on the way through

[JBmurc]

Happy to start accumulating from here

Plenty of headwinds for the next few years but I expect higher gas and coal prices as well as planned thermal plant closures to eventually flow through to higher wholesale electricity prices.

AGL has a decent moat with their own mines or long term cheap coal contracts.

Figure by 2025 things will have stabilised and happy to clip the dividend ticket on the way through

Yes going off my ANZ invest platform -AGL will pay 34c ex date AUG24th unfranked which is fine for us kiwis that couldn't claim the tax credits anyway >>

Very tempting load up as EV auto and and the other electronics we know use ....all need more and more Energy supplies ...AGL will turn around ..and like you say saok up the fat Yield in the meantime

[Aaron]

Yes going off my ANZ invest platform -AGL will pay 34c ex date AUG24th unfranked which is fine for us kiwis that couldn't claim the tax credits anyway >>

Very tempting load up as EV auto and and the other electronics we know use ....all need more and more Energy supplies ...AGL will turn around ..and like you say saok up the fat Yield in the meantime

Biggest CO2 emitter in Australia. Pressure on wholesale electricity prices (I think) and coal fired power stations, Long term share price down trend that does not seem to be abating. CEO resigned just prior to a big split into two companies, generation and retail.

Currently not quite half of Morningstars valuation and one of their few buy recommendations. Yield trap or great entry point, I do not understand the Aussie electricity market enough to know but currently generating good cashflows and nice dividend, just not sure how long it will last.

That is all I know from a quick skim read a while back. I was going to look at buying when the trend changed.

Is it too late to buy today with an ex date of the 24 August?

[Waikaka]

Biggest CO2 emitter in Australia. Pressure on wholesale electricity prices (I think) and coal fired power stations, Long term share price down trend that does not seem to be abating. CEO resigned just prior to a big split into two companies, generation and retail.

Currently not quite half of Morningstars valuation and one of their few buy recommendations. Yield trap or great entry point, I do not understand the Aussie electricity market enough to know but currently generating good cashflows and nice dividend, just not sure how long it will last.

That is all I know from a quick skim read a while back. I was going to look at buying when the trend changed.

Is it too late to buy today with an ex date of the 24 August?

I am no expert but didn't it used to be T+3?

[JBmurc]

Biggest CO2 emitter in Australia. Pressure on wholesale electricity prices (I think) and coal fired power stations, Long term share price down trend that does not seem to be abating. CEO resigned just prior to a big split into two companies, generation and retail.

Currently not quite half of Morningstars valuation and one of their few buy recommendations. Yield trap or great entry point, I do not understand the Aussie electricity market enough to know but currently generating good cashflows and nice dividend, just not sure how long it will last.

That is all I know from a quick skim read a while back. I was going to look at buying when the trend changed.

Is it too late to buy today with an ex date of the 24 August?

From my understanding as long as BUY in before the 24th you should be fine ... on ANZ invest it tells you when its trading ex-date ..

[Aaron]

Just rang ASB Securities they said as far as dividend ex dates go as long as you buy them before the 24th you will be OK.

The trade goes through two days later. I was thinking T + 3 but maybe not.

Looks a bit like another dividend trap for me to fall into. Probably better than Junior gold miners/explorers though.

Aurizon was another company. Railway lines seem a bit like a monopoly situation good dividend (in the current interest rate environment). Outlook might change if iron ore has peaked. Don't really know enough about the company customers and the freight so procrastinated.

AZJ share price has increased since I first looked at it whereas AGL has continued on down. A 34cent dividend next week on a say $7.25 share price is 4.7%. Obviously share price hasn't recovered after going ex-dividend for a few years. I should really listen to Phadraeus on this one.

[Aaron]

The share price falling in the run up to the ex-dividend date is not a good sign.

[Aaron]

This article might indicate partly why AGL's share price and expected earnings are not doing well.

Shut downs reducing demand for electricity, lower prices and higher input costs. Not sure how much control AGL would have over these things.

https://thewest.com.au/business/energy/origin-energy-slumps-to-23b-loss-c-3722351

Full disclosure made an impetuous decision to buy some prior to going ex-dividend but already regretting it. Phaedrus was one of the few posters who made a good living trading shares as far as I am aware and posted numerous charts showing the folly of buying into a downtrend. Lesson not learned by me... yet.

Getting caught up in JBmurc's enthusiasm is obviously bad for my investing health.

[JBmurc]

This article might indicate partly why AGL's share price and expected earnings are not doing well.

Shut downs reducing demand for electricity, lower prices and higher input costs. Not sure how much control AGL would have over these things.

https://thewest.com.au/business/energy/origin-energy-slumps-to-23b-loss-c-3722351

Full disclosure made an impetuous decision to buy some prior to going ex-dividend but already regretting it. Phaedrus was one of the few posters who made a good living trading shares as far as I am aware and posted numerous charts showing the folly of buying into a downtrend. Lesson not learned by me... yet.

Getting caught up in JBmurc's enthusiasm is obviously bad for my investing health.

I'm sorry did I promote you to BUY AGL ? ... I actually haven't done a much study on the company at all... more of a passing glance ..as being Bullish on Energy investment over the longer term my investment in CUE ...at some stage AGL has got to be a great BUY ..maybe present Buying will be rewarded longer term ...or maybe not ex dividend date always sees the SP reduce ...I'm sure the lockdowns haven't helped that and some poor mgmt. decisions ...

[Aaron]

I'm sorry did I promote you to BUY AGL ? ... I actually haven't done a much study on the company at all... more of a passing glance ..as being Bullish on Energy investment over the longer term my investment in CUE ...at some stage AGL has got to be a great BUY ..maybe present Buying will be rewarded longer term ...or maybe not ex dividend date always sees the SP reduce ...I'm sure the lockdowns haven't helped that and some poor mgmt. decisions ...

No, I need to DMOR, looked at this company a while back. My usual cursory glance, nothing in depth.

For some reason I am not clear on, wholesale electricity prices are expected to fall in Australia.
A big chunk of the company is coal fired generation which will have to change due to climate issues.
The split between retail and generation not sure why this is being done but mgmt assure shareholders it is in their best interest.
So big changes and large investments required to switch to greener energy production and a uncertain future.

The only thing stopping me from investing was the consistent downtrend which I have been warned never to buy into.

Learnt my lesson listening to you on junior gold stocks. Currently in last place on the ASX comp with three of your recommendations while you are 3rd from the top. Obviously some good picks but not the ones you gave me.

[JBmurc]

No, I need to DMOR, looked at this company a while back. My usual cursory glance, nothing in depth.

For some reason I am not clear on, wholesale electricity prices are expected to fall in Australia.
A big chunk of the company is coal fired generation which will have to change due to climate issues.
The split between retail and generation not sure why this is being done but mgmt assure shareholders it is in their best interest.
So big changes and large investments required to switch to greener energy production and a uncertain future.

The only thing stopping me from investing was the consistent downtrend which I have been warned never to buy into.

Learnt my lesson listening to you on junior gold stocks. Currently in last place on the ASX comp with three of your recommendations while you are 3rd from the top. Obviously some good picks but not the ones you gave me.

Yeah gutted some of the performances from these Gold shares I also hold or sold ... has cost me a good few 100k ... If you still held RXL did you get many CNR shares ?...I had enough of mgmt BS so dump and walked away with 20% of the profit I could have had >>

OBM has be absolutely thrashed ... purely from not meeting DFS targets ... they look to be trying to turn it around ...but hard with staff near on impossible to secure .. the Sector went from its deathbed to Boomtime like Iron ore,Copper O&G etc and with COVID in the mix all Mining staffing has been affected .. I did sell out of the likes of RXL , OBM .. I have recently brought back into OBM and seen 30% value wiped in weeks !!! so your not the only one pissed at the markets FEAR ..look at WWI I've dumped the bulk of my holding not that I don't believe the project doesn't have upside just that I don't think the market gives a rats ass about it >> so I basically threw away 30-40k in profits I had only weeks ago !!

WE really need GOLD to break out of its funk >>> this sideways action isn't helping sentiment(I'm sure the lockdowns in AUS haven't helped FEAR feeding FEAR) with the market thinking the worst outcomes to come rather than the facts AUD Gold is at record highs >> I wish I gave you POD as a pick but at the time we were talking around Gold focus .. POD being PGM Cu Ni play ..

Never a fan of giving exact stock picks too others as we all trade differently with risk profiles to match ...Its so easy to find great picks but who know whats around the corner or how the market will react week to week.. the bigger the upside the bigger the risks .. hoping for both of us ...the likes of OBM turn it around and we see a much healthier SP from production hitting DFS numbers

[clearasmud]

Yeah gutted some of the performances from these Gold shares I also hold or sold ... has cost me a good few 100k ... If you still held RXL did you get many CNR shares ?...I had enough of mgmt BS so dump and walked away with 20% of the profit I could have had >>

OBM has be absolutely thrashed ... purely from not meeting DFS targets ... they look to be trying to turn it around ...but hard with staff near on impossible to secure .. the Sector went from its deathbed to Boomtime like Iron ore,Copper O&G etc and with COVID in the mix all Mining staffing has been affected .. I did sell out of the likes of RXL , OBM .. I have recently brought back into OBM and seen 30% value wiped in weeks !!! so your not the only one pissed at the markets FEAR ..look at WWI I've dumped the bulk of my holding not that I don't believe the project doesn't have upside just that I don't think the market gives a rats ass about it >> so I basically threw away 30-40k in profits I had only weeks ago !!

WE really need GOLD to break out of its funk >>> this sideways action isn't helping sentiment(I'm sure the lockdowns in AUS haven't helped FEAR feeding FEAR) with the market thinking the worst outcomes to come rather than the facts AUD Gold is at record highs >> I wish I gave you POD as a pick but at the time we were talking around Gold focus .. POD being PGM Cu Ni play ..

Never a fan of giving exact stock picks too others as we all trade differently with risk profiles to match ...Its so easy to find great picks but who know whats around the corner or how the market will react week to week.. the bigger the upside the bigger the risks .. hoping for both of us ...the likes of OBM turn it around and we see a much healthier SP from production hitting DFS numbers

You are in a tough game JB but it's one you know and love.
The spec money is in "green" metals being produced greeny.
This could be for a long time although of course gold will have its uplifts, soon hopefully, I'm counting on it. (ALY, OXX).
See, what happened to KNI today, listed last week at 20c, hit$3.60 today and they have nothing

[JBmurc]

You are in a tough game JB but it's one you know and love.
The spec money is in "green" metals being produced greeny.
This could be for a long time although of course gold will have its uplifts, soon hopefully, I'm counting on it. (ALY, OXX).
See, what happened to KNI today, listed last week at 20c, hit$3.60 today and they have nothing

Yes sounds like PUMP n DUMP scheme with KNI brokers behind it ...no way should they have market value higher than 50mill IMHO >>https://www.afr.com/markets/equity-markets/pump-and-dump-group-targets-ipo-rocket-kuniko-20210826-p58m5f

[clearasmud]

Yes sounds like PUMP n DUMP scheme with KNI brokers behind it ...no way should they have market value higher than 50mill IMHO >>https://www.afr.com/markets/equity-markets/pump-and-dump-group-targets-ipo-rocket-kuniko-20210826-p58m5f

Not sure about that.
KNI was split off from Vulcan Energy, itself a hundred bagger since listing developing carbon zero emission, geothermic lithium products.
You can imagine the hype.

[JBmurc]

Not sure about that.
KNI was split off from Vulcan Energy, itself a hundred bagger since listing developing carbon zero emission, geothermic lithium products.
You can imagine the hype.

Yes the market certainly likes the story ...108Mill Cap on low carbon emission power supply in Norway ...but nothing more that some historic results over their 250sqkm land as assets ??

Vs someone like OBM worth 10mill less with 24.3Mt @ 2.8g/t for 2.2Moz Au Gold resource...a 150mill+ worth Gold Plant + infrastructure + Gold Production underway still ramping up and sorting issues with production ... 200Km of greenstone belt strike within 1350sqkm of prime Gold country just north of Kal.WA

[clearasmud]

Yep, the market is irrational sometimes. What's your sp target for OBM?

[Aaron]

AGL will be under a lot of pressure to move to renewables. Large investments might soak up cashflow for dividends.

https://www.theguardian.com/science/2021/sep/05/australia-warned-climate-crisis-will-wreak-havoc-on-economy-if-coal-isnt-phased-out

[JBmurc]

Yep, the market is irrational sometimes. What's your sp target for OBM?

All depends on next month if OBM can continue to lift production week on week last ann they stated 1290oz target for the last week of AUG .. they were having issues averaging just over 1000oz pw prev months ramping up ...

we need to see continued increases which in turn will lower AISC of production giving a profit per oz ...
Goal 1500-1600oz pw and the SP should head back over 20c ..

we see Qty on Qty positive cashflows which if they can keep AISC even higher than DFS @ 1700oz ~spot Gold 2450oz -- even at lower 1500oz pw target production
==== $1,150,000 Gross profit per week ... even with OBM higher costs of muti-pits ...

[Norwest]

Wallowing in the 5's today on good volume after briefly going there 2 days ago...

[STr]

Wallowing in the 5's today on good volume after briefly going there 2 days ago...

Seems the SP is going one way for this stock....how low can it go

[Aaron]

Seems the SP is going one way for this stock....how low can it go

Ultimately will depend on what sort of cashflow it can generate now and in the future and what is left after the transition from coal to renewables I suppose.

For now it is in a pariah industry a lot of large funds won't be able to invest in it, too much unknown I suppose and technical analysts won't invest in a clear down trend even if the fundamentals are OK.

So, no idea.

[Aaron]

24% capital loss for a 4.6% dividend. Was it worth it?

Time will tell. Except for the whole non-renewable issue and the fact this company might be completely different in a decade or two, power generators are generally a license to print money.

Sad but not panicking. As Phadraeus pointed out many times a company in a downtrend usually carries on down and it doesn't matter if you know(or think you know) the reason for it. I imagine the pain could be a lot more significant before the hurt stops.

[clearasmud]

Not having studied this company I just assumed the mass investment in house r ooftop solar is killing electricity prices and profits.

[Norwest]

Not having studied this company I just assumed the mass investment in house r ooftop solar is killing electricity prices and profits.

I don't claim to fully understand how negative spot pricing nor how Australia's NEM operates in detail, however the spot price regularly goes negative.

I agree with what you are saying around all that rooftop solar (without distributed battery storage) flooding the grid with excess power, however it also goes negative in the middle of the night.

AEMO | NEM data dashboard (https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/data-nem/data-dashboard-nem)

[peat]

suffice to say this close to the worst investment ever (only PRC did worse)

stupidly I have held through. at least I never bought more.

not worth getting out now. can hope there is some intrinsic value somewhere.

hopefully wholesale electricity prices rebound
I did note MCQ took a substantial holding recently. so perhaps they see deep value at this point.

[Soolaimon]

I seem to remember aquiring these shares when they took over a NZ gas company a good few years back and I have added over the years. The dividends have been really good over that time and the share price went up to $28 at it's peak. I wanted to sell then but my advisor said no. I don't have an advisor any more.
Anyway, I have bought a few more at these low prices and am happy to hold and see how the demerger into two identities eventuate.

[Aaron]

You might surmise that dividends would be cut as the company rapidly tries to move away from coal and being the largest CO2 emitter in Australia but Scott Morrison providing a ray of hope for AGL shareholders by promising to do very little about climate change at the Glasgow gab fest.

[Aaron]

Tempted to act like a reef fish and flee while I am ahead.

https://www.theage.com.au/business/companies/dangerous-dirty-health-workers-turn-up-the-heat-for-agl-coal-exit-20220131-p59slk.html

Not sure how they plan to charge their EVs without power.

Thinking it through unless they can convert their cashflows from coal to acceptable green energy then this is a sunset business.

I guess their retail arm could sell other peoples power.

Anyone follow this company at all? Thoughts about the future? A dividend company definitely not growth unless they go hard out towards new generation, in which case dividends will fall and it is not really growth, replacing one source of energy production with another.

[peat]

I doubled at $5:15 so average price not so bad now. will see it through now till the split

[Aaron]

Not very committed takeover offer at $7.50

https://www2.asx.com.au/markets/company/agl

Well shy of Morningstars valuation, although they have dropped a $1 or so down to $13. Not sure what the average price for analysts is on AGL.

Not really very exciting, still really not sure where this company is at. A lot of changes over the next 10 or so years to renewables.

I see ethanol worse than petrol for climate change as an example of misguided change.

[peat]

Not very committed takeover offer at $7.50

https://www2.asx.com.au/markets/company/agl

Well shy of Morningstars valuation, although they have dropped a $1 or so down to $13. Not sure what the average price for analysts is on AGL.

Not really very exciting, still really not sure where this company is at. A lot of changes over the next 10 or so years to renewables.

I see ethanol worse than petrol for climate change as an example of misguided change.

thanks for pointing that out I had only noticed the price rise, hadnt seen the news announcement

First offer usually gets overbid is the mantra round here. so wait and see I guess,

with price at 7.90 and after doubling at 5.15 I'm only down 5% overall now, cf to nearly 50% at one stage, so feels a lot better.

[Aaron]

I would be happy to sell at a 30% premium to the current share price as I do not have a strong conviction about this company. Too much uncertainty in the future.

https://www.theguardian.com/business/2022/feb/23/agl-open-to-higher-takeover-bid-but-says-cannon-brookes-plan-to-close-coal-by-2030-is-unrealistic

Also a note that the deal may save shareholders from a slow death, does not fill me with confidence.

Morningstars research predicts earnings will nearly halve for 2022 and dividends will more than halve. I have nearly talked myself out of it already.

[peat]

I now belatedly see that there was another take over offer in early March, this time at 8.25.
Though obviously not rated as a real opportunity by the market given price struggling to hold 7.50
But it shows there are bottom sniffers out there so in general is a good indication of support and possible rises in future.

[peat]

a good indication of support and possible rises in future.


I would be happy to sell at a 30% premium to the current share price

we are getting there Aaron

I'm actually back in the black now, and with some small divi's along the way....
13707

[Aaron]

we are getting there Aaron

I'm actually back in the black now, and with some small divi's along the way....
13707

Pretty happy at the moment share price up 17% since purchasing in August 2021.

One dividend in October which was a 4.1% yield on cost price.

Not so happy about the split up of the company if the critics are right not much to be gained by it.

Expecting big falls in dividend as predicted by Morningstar who have downgraded AGL from buy to accumulate "due to price change" valuation still at $13.30 but no research on the ASB Securities website so not sure what is happening there.

Just looked at company announcements. March 2022 dividend .16 compared to .41 a year earlier. ASB securities don't always get the paperwork to me on a timely basis as I have the option of margin lending they hold the shares on my behalf. I have a standing instruction to join all dividend reinvestment plans so maybe they have done it this time. A 2% yield on cost price so the dividend halves as predicted, hopefully money is invested in more green power production rather than the cost of winding down the coal fired stations.

I really have little idea what is going on. Probably should sell.

[Aaron]

Article in the herald this morning about the tech billionaire wanting to stop the separation of the businesses so profit from retailing can be ploughed into conversion to green energy.

Peat you were looking to sell once the split had taken place. Are you still holding?

Tempted to take my gain and increase my cash holdings. If this guy is successful I think it would be the best thing for the company and society but unfortunately I am in it for the dividend as I am not yet a billionaire and am looking for income as I near retirement. Once transitioned to green energy it may be a steady dividend paying utility once again.

I am a terrible selfish person not wanting to invest to save the world but to provide a reasonably comfortable retirement for me.

I wonder if other world improvers might start investing or what happens to the share price once our billionaire stops buying?

[Aaron]

I am guessing you have sold Peat. The demerger was cancelled.

Mike Cannon-Brookes might be a tech guy with too much money but he has the support of Brookfields who I would think would want a return on investment and they tend to invest long term. Maybe they are world changers using other peoples money to save themselves from climate change, who knows.

CEO and Board chair have gone along with two directors. Big changes ahead for better or for worse. Slow shareholders like me only waking up to this today, share price movement today will be interesting.

[peat]

I am guessing you have sold Peat. The demerger was cancelled.


I only found out it was cancelled by reading your post today Aaron. But I had halved my holding already on the basis that I considered Albanese a risk to this non eco business.
I tell my self I sold the ones I bought at 5,15 so on a last in first out basis I made a profit but in reality I just broke even but have reduced my average cost to about current price, maybe slightly lower.
I'll just sit on this half now....
I sold half my BPT as well. definitely made a profit on those.

[Joshuatree]

I only found out it was cancelled by reading your post today Aaron. But I had halved my holding already on the basis that I considered Albanese a risk to this non eco business.
I tell my self I sold the ones I bought at 5,15 so on a last in first out basis I made a profit but in reality I just broke even but have reduced my average cost to about current price, maybe slightly lower.
I'll just sit on this half now....
I sold half my BPT as well. definitely made a profit on those.

peat , your mailbox is full, can you please empty some out.

[Aaron]

Sold out but wonder how the Australian electricity crisis might affect profitability and the idea of a rapid move away from coal. A big article in the herald this morning.

[peat]

peat , your mailbox is full, can you please empty some out.
have done so now

still have 5% of my equity portfolio in this dog.
I hope the directors can just get on with things and not lament they didnt demerge....

[huxley]

Brookfield have accumulated a small stake (under 5%) so they must still be interested, they recently raised USD $15B in a green transition fund which is focusing on opportunities like AGL. AGL say they are not wanted to see any offer around $8.25 as they see the SP as depressed..

I have a small stake in AGL, interesting to see how this one plays out. Company update on strategy in August.

https://finance.yahoo.com/news/canadas-brookfield-buys-2-6-001126386.html

[Aaron]

Australia looking at higher energy prices. AGL greeny takes charge.

https://www.abc.net.au/news/2022-10-27/federal-government-facing-unpleasant-choices-on-energy/101580884

I can't understand govts (voters) they want to fight climate change and reduce CO2 emissions but if you suggest they should pay more for energy you get Labour dropping the tax on petrol, Liz Truss printing billions to cap everyones power bill and Australia now looking at handouts.

If you want people to use less fossil fuels raise the price, it will work every time.

I have been reading about a lack of investment in fossil fuels, (think Labour banning further exploration in NZ) and how we might hit a point where the depletion of cheap fossil fuel energy has not been replaced by renewable energy and because it takes so long to get the coal or oil out of the ground we have the potential for energy shortages. Too big of an issue to know the truth but interesting none the less.

I don't imagine the climate activists will be offering to cover some of the additional energy costs to save the planet. They will be whining along with the rest of the voting public so you will end up with these stupid govt (voter) responses.

The price cap in the UK had the potential to increase energy consumption as once you reached the cap there was no incentive to conserve energy.

[mcdongle]

The price cap in the uk is on the kwh price not the amount you used, The more you use the more you pay.

[Aaron]

The price cap in the uk is on the kwh price not the amount you used, The more you use the more you pay.

Thanks for that, I have no idea, just thought it went along with my rant, sorry if it was fake news. Capping the price of the kwh might encourage more usage, unless the cap was set pretty high, though not as bad as a price cap.

[mcdongle]

The whole thing has been pretty badly worded and confusing, But hey its the government.

[Bjauck]

Brookfield have accumulated a small stake (under 5%) so they must still be interested, they recently raised USD $15B in a green transition fund which is focusing on opportunities like AGL. AGL say they are not wanted to see any offer around $8.25 as they see the SP as depressed..

I have a small stake in AGL, interesting to see how this one plays out. Company update on strategy in August.

https://finance.yahoo.com/news/canadas-brookfield-buys-2-6-001126386.html

Brookfield are going for Origin Energy (SP up 35% today) now.

[peat]

Update to FY23 Earnings Guidance and FY24 Earnings Guidance AGL has narrowed its underlying earnings ranges for FY23 as follows:



[*=1]Underlying EBITDA between $1,330 and $1,375 million (previous guidance was between $1,250 and $1,375 million); and






[*=1]Underlying Profit after tax between $255 and $285 million (previous guidance was between $200 and $280 million). These ranges reflect an improved second half, in line with expectations, driven by increased generation due to improved plant availability and a reduction in forced outages, and higher customer margin due to disciplined margin management and an increase in customer services. This is partly offset by higher operating costs (excluding depreciation and amortisation) due to increased maintenance costs, seasonal net bad debt expense and the impact of inflation.




Additionally, AGL has provided guidance for its FY24 underlying earnings, as follows:



[*=1]Underlying EBITDA of between $1,875 and $2,175 million; and  Underlying Profit after tax between $580 and 780 million.



So the ship steadies.... Price attempting to return to older levels

14639
long way to go tho

14640

[peat]

the recovery continues... it has now nearly doubled from the lows in less than two years ...
but is still half what it was four years ago