AGL

The AGL result demonstrates they are managing well, and the market liked it. Higher plant availability, more stable markets, higher wholesale electricity prices, made it look like the AGL of old.

Cashflows were excellent.

They also seem to be doing the basics right as well; voice of the customer, NPS, engagement scores are all moving in the right direction. Hard to run a business with unhappy customers and disgruntled staff.

Customer numbers are stable across energy, and growing off a zero base in teleco subscribers.

AGL churn rates have drifted higher in a competitive market, but remain well below that of market.

Where those electricity prices wind up determines where profits & the share price go. Since the portfolio hedges are built from the VWAP (dotted lines) and the traded forward curve (wiggly line) it does suggest the feared forward-looking earnings decline is more modest…

…than the share price decline has suggested (i.e. from $12ish to $8ish, partially offset by today’s result).

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.