Power shares

[peat]

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

[Snow Leopard]

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.

[Norwest]

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

Hi peat,

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

Attachment 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:

agl3.jpg

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.

[Snoopy]

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%.

Here is a question to ponder. If you owned an electric car on Tuesday, then you sold it and leased it back, would you be 'less green' on Wednesday?

SNOOPY

[Norwest]

Here is a question to ponder. If you owned an electric car on Tuesday, then you sold it and leased it back, would you be 'less green' on Wednesday?

SNOOPY

It's a fantastic question Snoopy, but I am not one for virtue signalling. If I owned a car rental business I would buy ICE vehicle's as I'm not the one paying for the gas and I would get a better return on my investment. I would much rather own a great generation asset than be in the retail electricity market as I see far more value in the former.

Here is a question for you

Are you better to own your best lemon tree's to supply your lemonade stand, or;

Sell an 80% stake of the best lemon tree's and then purchase the best lemons for your lemonade stand? All the while keeping ownership of your diseased and end of life lemon trees?

[Snoopy]

Here is a question for you

Are you better to own your best lemon tree's to supply your lemonade stand, or;

Sell an 80% stake of the best lemon tree's and then purchase the best lemons for your lemonade stand? All the while keeping ownership of your diseased and end of life lemon trees?

Your question is better than mine, so I will answer it with one extra twist. That is, once you serve up your lemonade the customers cannot distinguish which lemonade has come from your old end of life lemon trees and which comes from your new lemon tree orchard, in which you have sold off 80% of your interest. The issue of 'best lemons' is largely an ease of production question and becomes meaningless to lemon juice drinkers once the lemons hit the lemon squeezer.

The answer depends on the fine print that governs how you buy your lemons from your 80% equity partner. Let's say you don't know much about growing lemon trees. Your old orchard you bought from a grizzled neighbour who planted them way back before you took on the business. The local council are looking at rezoning that land in a way that means you may not be allowed to replant the old lemon tree grove in the foreseeable future. Your partner in the new Orchard knows a lot about cultivating a new lemon tree grove. But they know little about selling lemonade. So what we have a situation of mutual benefit. Someone else largely looks after your trees. You have the customer relationships so you can keep selling lemonade at the gate.

The problem that might arise down the track is when your 80% equity partner in the new lemon trees figures out that they too have a driveway. Why don't they set up their own lemonade stand? After all it is the same lemon juice, and the new 80% partner gets to clip the retail end of the profit ticket as well. An 80% equity holder can outvote the 20% partner who is not at all happy with their plans. But since the 80% equity owner is far better off diverting product to their their own lemonade stand, the original 20% partner is left with a much smaller stand supplying lemonade from a decaying bunch of trees that may soon be legislated out of existence. The 20% partner is in effect screwed. Is that how you see things Norwest?

SNOOPY