AGL - AGL Energy

[qldfrog]

Don't thank me and my apologies if you invested......

I maintain my view that the generation assets have real value, noting that wholesale electricity prices continue to trend upward, but it would seem that the company's management doesn't grasp how to turn that value into one that benefits shareholders.

Average wholesale price across the National Electricity Market (all states except WA and NT):

February 2020 = $55.63
March 2020 = $43.88
April 2020 = $36.61
May 2020 = $37.90
June 2020 = $35.48

...

February 2021 = $35.32
March = $40.48
April = $52.48
May = $107.33
June to date = $157.45

So year on year a pretty decent price rise there and as a low cost generation company with generation physical volumes exceeding retail sales, AGL ought to be doing nicely from that.

It seems however that management isn't managing to turn that into value for shareholders. Whilst I got it right about prices moving up, I very clearly didn't foresee what management would do....

The only other companies in the sector I'm aware of having done anything remotely similar was an unlisted one that contemplated exiting its relatively small retail operation, selling that as a going concern, in order to free up capital to further invest into the ongoing generation business. That was only a thought however, something they looked at as part of considering how to raise capital for the new investment, and they haven't gone through with it and are instead looking at other options to fund their planned investments.

Looking at the physical assets being split, it's pretty much straight down the divide from a technical perspective.

Hydro generation, open cycle (peaking) gas turbines, internal combustion generating plant and wholesale gas contracts stay with AGL.

Coal mining, coal-fired generation, base load gas-fired generation, physical gas production and storage infrastructure and contracts regarding purchase of energy from the SA and Victorian wind farms plus operation of the Dalrymple battery (SA) go into the new company Accel Energy.

fully agree, a management issue, not a business issue, but as with AMP, Boral and so many others , starting with a pot of gold, bad management can manage to turn it into a pot of sxxt;
worse, AGL is big enough so that the average aussie will probably pay this mismanagement with blackouts in the future

 

[sptrawler]

fully agree, a management issue, not a business issue, but as with AMP, Boral and so many others , starting with a pot of gold, bad management can manage to turn it into a pot of sxxt;
worse, AGL is big enough so that the average aussie will probably pay this mismanagement with blackouts in the future

The interesting part will be how they divi up the debts, how much debt is each section taking with them?
Just my opinion.

 

[qldfrog]

The interesting part will be how they divi up the debts, how much debt is each section taking with them?
Just my opinion.

They will move the debt to the bad coal powered generation, and be ready to burn new cash on their funky the new dodo.i genuinely can not see how this could work even medium term.
Will have to find another dirty name to leverage the carbon facts vs narrative gap.hopefully not one to commit suicide again.

 

[InsvestoBoy]

Don't thank me and my apologies if you invested......

No really thankyou for always sharing your knowledge and thoughts.

I didn't get into any energy plays in the end, missed my entry and then didn't get a chance to re-evaluate my strategic thinking.

It seems however that management isn't managing to turn that into value for shareholders. Whilst I got it right about prices moving up, I very clearly didn't foresee what management would do....

To be honest, sentiment is horrible right now, probably a great time to get in (who's left to sell?!), but I ended up putting my available funds into something in a completely different sector and overseas.

 

[orr]

Well worth a read for those with any interest in this company...particulary holders of the last few years.

Exclusive: Frydenberg pushed AGL to sack boss

As AGL attempted to clean up its energy, Josh Frydenberg intervened to have its chief executive sacked. Now the company is de-merging to salvage its failing coal assets.

www.thesaturdaypaper.com.au

Of note is the price plummet since Vesey's departure. tar Josh....

 

[xen88]

“AGL Energy shareholders would hold one share in each of Accel Energy and AGL Australia for. every share they own in AGL Energy on the applicable record date.”

Does this mean if you have 300 shares in AGL they will give you 300 shares in Accel?

 

[frugal.rock]

Does this mean if you have 300 shares in AGL they will give you 300 shares in Accel?

Give implies a gift.
I imagine you've paid (dearly?) for them.
One would aquire them, yes.

It doesn't get better;

S&P/ASX 50 Index Rebalance – Effective Prior to the Open on September 20, 2021

Removal, AGL, AGL Energy Limited

https://c.tenor.com/gv9ALTvjKYIAAAAC/scooby-doo-ruh-roh.gif

 

[divs4ever]

that would imply a further small slide for AGL , caused by ASX 50 ETFs divesting ( there is at least one using that index )

would an ETF/LIC focusing on ex-top 50 step into the gap ??

 

[xen88]

Will AGL shares ever recover ?

 

[xen88]

Also how would the value the share price for the new company Accel energy ?

 

[StockyGuy]

Bought a chunk of AGL yesterday at 5.82 - never auspicious sign when it drops down straight after - closing today at 5.68. It's a long termer for me (in whatever form, given impending split into 2 companies). IMO uncertainty on the split up is punishing the share price irrationally.

This one has broken many hearts, though There's a lot of negative sentiment around from those who got in at much higher prices, and may've sold already at a big loss. It's not what you expect from an ancient Aussie household name utility company.

(There is no recommendation here; it's a long term gamble. I'm prepared for the falling knife to bloody my hands.)

 

[Belli]

I suspect that, despite AGL being outside of the Top 50, an LIC such as MIR will not be holding it. It has common directors with AFI and that LIC disposed of the majority of its holdings in AGL in 2019 (at about $22/share) and the remainder the following year at an average of around $16/share.

Even WHF has reduced its holding in it to approximately 200,000 shares (basically to a rump holding of no consequence) and I understand ARG stated one of the regrets was taking too long to off load AGL.

Out of curiosity I had a look at the annual reports of AUI & DUI. Neither hold AGL. Whether they ever did I don't know and I'm not inclined to find out.

 

[mtbwanabe]

Did anyone notice the buy up of AGL on 29 Nov?

 

[sptrawler]

Did anyone notice the buy up of AGL on 29 Nov?

I think I will be having a nibble, now they have some focus on where their future lies and I've never bought an electrical utility before.
So be warned if I'm thinking it might be a goer, I'm usually dead wrong.

 

[Ann]

I think I will be having a nibble, now they have some focus on where their future lies and I've never bought an electrical utility before.
So be warned if I'm thinking it might be a goer, I'm usually dead wrong.

This is most certainly on my watch list sp. However, I would not be buying into it just yet. It is still in its free fall stage but seems to be slowing a bit perhaps but I can still see quite a bit more downside. It needs to break well away from its downtrend line and move sideways to consolidate for a while. ORG might also be worth a look if you are looking at utilities.

Did anyone notice the buy up of AGL on 29 Nov?

It was actually a sell-out by the BlackRock group, not a buy-up.

 

[sptrawler]

This is most certainly on my watch list sp. However, I would not be buying into it just yet. It is still in its free fall stage but seems to be slowing a bit perhaps but I can still see quite a bit more downside. It needs to break well away from its downtrend line and move sideways to consolidate for a while. ORG might also be worth a look if you are looking at utilities.



It was actually a sell-out by the BlackRock group, not a buy-up.

Hi Ann, I hear where you are coming from, but I'm terrible at picking the bottom, as I will be a long term holder and this will be a massive project to turn this ship, I will just pick up as funds become available.
They from memory are a dividend payer, so I will just add them to my income group, I really should take a more active interest but there are a lot smarter people than me on the forum who are willing to share their Knowledge as you do and I must say is greatly appreciated.
I just try and focus on what are they trying to achieve, how are they going to get there and how are they going to fund it.

 

[mtbwanabe]

It was actually a sell-out by the BlackRock group, not a buy-up.

I've clearly got a lot to learn. Sell-out by the BlackRock group? So who was the buyer, buy back by AGL? Was this information publically available? Thanks for the perspective on the longer view as I was considering this spike in volume as a potential trigger for a trend reversal.

They from memory are a dividend payer, so I will just add them to my income group, I really should take a more active interest but there are a lot smarter people than me on the forum who are willing to share their Knowledge as you do and I must say is greatly appreciated.
I just try and focus on what are they trying to achieve, how are they going to get there and how are they going to fund it.

I was in AGL for this reason awhile ago but their div has been slowly eroding so the appeal is limited for me. The spike in volume is what got my attention and got me following a bit closer.

 

[finicky]

How strange I have no interest in AGL but took notice of it being a James Gerrish pick from reading just tonight. It's happened a few times now that just as I become interested in something someone posts about it on ASF . He seems to be saying that it is now trading at below asset value? James Gerrish is worth a follow, one example he was onto WHC before it took off. He likes gold stocks lately. WTH happened to earnings in 2021?

James' pick: AGL Energy (ASX: AGL)​

James Gerrish: I missed the component about quality, but I've certainly got one that's been depressed over the last 12 months. It's AGL Energy. It's down 53%. I think it's the fourth worst-performing stock on the ASX 200 this year. A large portion of that drop is correct, but it now becomes an asset at play. So it is trading at around $5.50 a share. It's cheaper than its retail business. So that for me is a buy, and will do better in '22 than it did in '21.

Chart: not interested myself but it's a chart that I would be tempted to buy as a good chance of having bottomed: weekly positive candles have formed outside the resistance rail of the relentless downtrend, very high positive volume bar, some positive momentum divergence, this low is not much lower than previous low.

Weekly

 

[Smurf1976]

ORG might also be worth a look if you are looking at utilities.

A key difference between the two is that Origin has a major gas business, as in production of gas as such, whereas AGL is a very trivial player in that space.

Origin's exposure to commodity prices is thus different from AGL's.

Just something to be aware of....

 

[Ann]

I've clearly got a lot to learn. Sell-out by the BlackRock group? So who was the buyer, buy back by AGL? Was this information publically available? Thanks for the perspective on the longer view as I was considering this spike in volume as a potential trigger for a trend reversal.

This information is publicly available on the ASX announcements. There may be a day or two delay but around the time of the spike, you will often see who it is. I find it very interesting that instead of just a blanket "ceasing to be a substantial holder notification with "this many held and this many sold" they are now having to show their trading history. You can see what type of trade it is such as on market or in specie or borrow return. It is very interesting and worth a look, they behave like day traders. There appears to have been a concerted effort to sell this company down since 2017. You can see JP Morgan were shorting this for a while as well in 2021. The ASX notices are full of fun stuff, a great read. If there is anyone with a fondness for adding and subtraction you may well be able to see how well or badly BlackRock have performed over the four years.

Now as far as a spike being a trigger for a trend reversal, it is often the case. Years ago in the 'noughties' era I used to watch spikes, they were a good indicator but often the reversal could take ages to happen, so I didn't bother in the end. There are easier ways of seeing a reliable trend reversal. However, it is a really interesting exercise to check into the story of a spike. As often as not it is a sell for attention .... as in "look at moy, look at moy." ( Although, not in BlackRock's case, my opinion is they were CC activists trying to black mail AGL regarding using coal for power generation. Now the current fight has been lost regarding coal by the CC activists so taking their bat and ball home. EFF off is what I say to them!)

This is the ASX notice of interest....knock yourself out, those with an adding machine!

02/12/2021 10:50 am Ceasing to be a substantial holder