AGL - AGL Energy

[Dark1975]

@Dark1975 I think that you can't go wrong here, long term the SP should recover.

Will the dividend be scaled back ? this is what you are looking at ?

Below is the Monthly chart and the Dividend History from Market Index for reference.

View attachment 118560

Yes , Agl intends to commit to 2023, look to attachment, Sorry for lack of information , Day trading Btc atm Interesting time it hit on the 1hr timeframe, will add more information later on the dividend

 

[Dona Ferentes]

unloved

$2.69 billion in write downs show the severe headwinds faced by Australian energy companies caused by plunging wholesale electricity prices, unprofitable renewable power sales contracts and higher site remediation costs....

Thirteen year lows

 

[qldfrog]

I know, the narrative, why invest in money making and still here in 10 20y company when you can gamble on a concept

 

[sptrawler]

Power generation is not a space I would want to be in ATM, way too many dollars need spending, to appease the mob with the pitchforks. ?

 

[Smurf1976]

Electricity spot prices are down across the industry and that'll be affecting all companies in some way but is particularly an issue for those who are net long generation, that is they generate more than they sell under their own retail brand(s), and AGL is such a company.

Following prices are average spot prices for the 2018-19 | 2019-20 | 2020-21 to date financial years. Focusing here on the states of primary importance to AGL.

All prices are $ AUD per MWh (megawatt hour) and are simply the market spot price averages for the financial year.

NSW = $93.98 | $79.72 | $56.51

Victoria = $129.00 | $87.10 | $47.16

SA = $142.33 | $78.35 | $37.85

The figures say it all really, the market value of bulk electricity has come down from the extraordinarily high levels seen in 2018-19 to a more normal price today. That's not good for the profits of anyone generating electricity.

Looking at prices received by fuel type and location for all companies but where AGL has a major presence:

NSW coal-fired generation (companies = AGL (largest), Origin Energy, Energy Australia, Delta Electricity) = $90.87 | $75.80 | $54.57

Victorian coal-fired generation (companies = AGL (largest), Energy Australia, Alinta) = $108.40 | $73.65 | $41.66

Note that AGL is the coal supplier to Alinta in Victoria, AGL owns the mine and supplies 100% of it's own needs in that state as well as Alinta's. The terms of the contract between the two companies are not public so far as I'm aware.

SA gas-fired generation AGL plants only as follows:
Torrens Island A & B power stations = $165.89 | $96.20 | $54.60
Barker Inlet power station = N/A not operating | $87.63 | $73.29

Victorian hydro generation (companies = Snowy Hydro (largest), AGL (most of the rest), Meridian (minor)) = $222.97 | $154.33 | $67.80

NSW large scale solar generation (all companies including AGL) = $90.00 | $71.56 | $52.71

Average price for wind generation, all NEM states (Qld, NSW, Vic, Tas, SA) and all companies noting that AGL has multiple facilities either owned or contracted: $86.59 | $55.89 | $34.68

The above ultimately comes from Australian Energy Market Operator data, the raw form of which is freely available to anyone from their website www.aemo.com.au whilst various third party sites such as Aneroid and OpenNEM provide a more user friendly graphical or table form.

It should be noted that contract arrangements are such that spot prices don't directly drive revenue for generation companies in the very short term but ultimately as with anything, contract pricing will reflect spot price expectations.

 

[Smurf1976]

Further to my previous post about price, the El Nino weather phenomenon and effects of COVID-19 related lockdowns etc on the economy are affecting volume.

Since it's a seasonal issue, looking specifically at the past two months (that is, Summer thus far):

Whole National Electricity Market (all states except WA and NT):

Volume (all sources) January 2021 = 17,455 GWh (or 17,455,000 MWh)
Volume (all sources) January 2020 = 18,879 GWh

Volume (all sources) December 2020 = 17,105 GWh
Volume (all sources) December 2019 = 17,648 GWh

So the relative lack of heatwave conditions, the occurrence of which drives air-conditioning load, thus far is affecting volume. Meanwhile some specific generation sources have increased output, due to construction of new facilities, thus further reducing volume from other facilities.

Following data is for all companies except where indicated otherwise:

NSW Coal January 2021 = 4136 GWh
NSW Coal January 2020 = 5003 GWh

Victoria Coal January 2021 = 3101 GWh
Victoria Coal January 2020 = 3108 GWh

AGL is the largest operator in both cases and accounts for about 44% of coal capacity in NSW and 45% in Victoria and these assets comprise a large portion of AGL's physical electricity production.

SA gas-fired generation from Torrens Island A & B power stations (AGL owned)
January 2021 = 103 GWh
January 2020 = 138 GWh

SA gas-fired generation from Barker Inlet power station (AGL owned)
January 2021 = 13 GWh
January 2020 = 35 GWh

All other companies gas-fired generation in SA (excl AGL)
January 2021 = 184 GWh
January 2020 = 257 GWh

Victoria hydro generation (AGL is the second largest operator with 30% of capacity)
January 2021 = 215 GWh
January 2020 = 194 GWh

Wind generation by all companies in all NEM states (AGL has a presence in this)
January 2021 = 1852 GWh
January 2020 = 1431 GWh

Large scale solar generation by all companies in all NEM states (AGL has a presence in this)
January 2021 = 795 GWh
January 2020 = 553 GWh

As background, generation by companies other than AGL

Estimated small scale (households etc) solar generation in all NEM states
January 2021 = 1590 GWh
January 2020 = 1216 GWh

Queensland coal generation (various companies)
January 2021 = 4112 GWh
January 2020 = 4502 GWh

Queensland gas generation (various companies)
January 2021 = 455 GWh
January 2020 = 645 GWh

NSW gas generation
January 2021 = 66 GWh (Energy Australia share 64 GWh, others 2 GWh)
January 2020 = 143 GWh (Energy Australia share 96 GWh, others 47 GWh)

Victoria gas generation (AGL has a minor presence with 6.7% of Vic gas-fired capacity)
January 2021 = 30 GWh
January 2020 = 141 GWh

Tasmania gas generation (all of which is owned by AETV Power, a subsidiary of Hydro Tasmania)
January 2021 = 2 GWh
January 2020 = 5 GWh

Queensland hydro generation (all of which is owned by CleanCo)
January 2021 = 87 GWh net of pumping
January 2020 = 23 GWh net of pumping

NSW hydro generation (Snowy Hydro owns most of it, Origin is the other significant operator)
January 2021 = 244 GWh net of pumping
January 2020 = 202 GWh net of pumping

Tasmania hydro generation (all of which is owned by Hydro Tasmania)
January 2021 = 453 GWh
January 2020 = 611 GWh

Queensland biomass generation (various companies)
January 2021 = 11 GWh
January 2020 = 11 GWh

So basically the entire industry has taken a volume hit with the only increases being wind, solar and eastern mainland states hydro.

Price down and volume down = not a particularly profitable situation for the generation side of the business.

Other major parts of AGL's business are electricity retail, natural gas retail and physical gas storage. The first two are simply a margin business, the difference between buy price and sell price less costs, whilst gas storage is a relatively minor activity and basically a "buy low, sell high" situation albeit one involving physical movement of the actual commodity.

Contrary to what most would assume - AGL has negligible involvement in actually producing gas and does not own substantial gas pipelines or electricity networks. It's a power generation, gas / electricity retail and to a much lesser extent gas storage company in practice although it does currently have a proposal for an LNG import terminal to be built in Victoria which, if it goes ahead, would make them a gas supplier as such (well, a supplier in the domestic market context).

The present AGL owned LNG facility in Newcastle is storage only. Take gas out of the pipeline in summer, turn it into LNG and put that in the tank, reverse that in winter and put the gas back in the pipe. It's a pure storage operation apart from any LNG they happen to sell "as LNG" by loading it into a road tanker truck for use by whoever.

 

[joeno]

It seems to me that all electric utility companies have been in a massive bear market these last 12 months.

Can anyone explain why? The means of generating electricity is so cheap now so these stocks should be doing well right.

Also what do we see as potential price floor for AGL? It's trading cheap at 7PE

 

[qldfrog]

Further to my previous post about price, the El Nino weather phenomenon and effects of COVID-19 related lockdowns etc on the economy are affecting volume.

Since it's a seasonal issue, looking specifically at the past two months (that is, Summer thus far):

Whole National Electricity Market (all states except WA and NT):

Volume (all sources) January 2021 = 17,455 GWh (or 17,455,000 MWh)
Volume (all sources) January 2020 = 18,879 GWh

Volume (all sources) December 2020 = 17,105 GWh
Volume (all sources) December 2019 = 17,648 GWh

So the relative lack of heatwave conditions, the occurrence of which drives air-conditioning load, thus far is affecting volume. Meanwhile some specific generation sources have increased output, due to construction of new facilities, thus further reducing volume from other facilities.

Following data is for all companies except where indicated otherwise:

NSW Coal January 2021 = 4136 GWh
NSW Coal January 2020 = 5003 GWh

Victoria Coal January 2021 = 3101 GWh
Victoria Coal January 2020 = 3108 GWh

AGL is the largest operator in both cases and accounts for about 44% of coal capacity in NSW and 45% in Victoria and these assets comprise a large portion of AGL's physical electricity production.

SA gas-fired generation from Torrens Island A & B power stations (AGL owned)
January 2021 = 103 GWh
January 2020 = 138 GWh

SA gas-fired generation from Barker Inlet power station (AGL owned)
January 2021 = 13 GWh
January 2020 = 35 GWh

All other companies gas-fired generation in SA (excl AGL)
January 2021 = 184 GWh
January 2020 = 257 GWh

Victoria hydro generation (AGL is the second largest operator with 30% of capacity)
January 2021 = 215 GWh
January 2020 = 194 GWh

Wind generation by all companies in all NEM states (AGL has a presence in this)
January 2021 = 1852 GWh
January 2020 = 1431 GWh

Large scale solar generation by all companies in all NEM states (AGL has a presence in this)
January 2021 = 795 GWh
January 2020 = 553 GWh

As background, generation by companies other than AGL

Estimated small scale (households etc) solar generation in all NEM states
January 2021 = 1590 GWh
January 2020 = 1216 GWh

Queensland coal generation (various companies)
January 2021 = 4112 GWh
January 2020 = 4502 GWh

Queensland gas generation (various companies)
January 2021 = 455 GWh
January 2020 = 645 GWh

NSW gas generation
January 2021 = 66 GWh (Energy Australia share 64 GWh, others 2 GWh)
January 2020 = 143 GWh (Energy Australia share 96 GWh, others 47 GWh)

Victoria gas generation (AGL has a minor presence with 6.7% of Vic gas-fired capacity)
January 2021 = 30 GWh
January 2020 = 141 GWh

Tasmania gas generation (all of which is owned by AETV Power, a subsidiary of Hydro Tasmania)
January 2021 = 2 GWh
January 2020 = 5 GWh

Queensland hydro generation (all of which is owned by CleanCo)
January 2021 = 87 GWh net of pumping
January 2020 = 23 GWh net of pumping

NSW hydro generation (Snowy Hydro owns most of it, Origin is the other significant operator)
January 2021 = 244 GWh net of pumping
January 2020 = 202 GWh net of pumping

Tasmania hydro generation (all of which is owned by Hydro Tasmania)
January 2021 = 453 GWh
January 2020 = 611 GWh

Queensland biomass generation (various companies)
January 2021 = 11 GWh
January 2020 = 11 GWh

So basically the entire industry has taken a volume hit with the only increases being wind, solar and eastern mainland states hydro.

Price down and volume down = not a particularly profitable situation for the generation side of the business.

Other major parts of AGL's business are electricity retail, natural gas retail and physical gas storage. The first two are simply a margin business, the difference between buy price and sell price less costs, whilst gas storage is a relatively minor activity and basically a "buy low, sell high" situation albeit one involving physical movement of the actual commodity.

Contrary to what most would assume - AGL has negligible involvement in actually producing gas and does not own substantial gas pipelines or electricity networks. It's a power generation, gas / electricity retail and to a much lesser extent gas storage company in practice although it does currently have a proposal for an LNG import terminal to be built in Victoria which, if it goes ahead, would make them a gas supplier as such (well, a supplier in the domestic market context).

The present AGL owned LNG facility in Newcastle is storage only. Take gas out of the pipeline in summer, turn it into LNG and put that in the tank, reverse that in winter and put the gas back in the pipe. It's a pure storage operation apart from any LNG they happen to sell "as LNG" by loading it into a road tanker truck for use by whoever.

No denying lower electricity price and volume and as a system guy, the trend is not good but i also play some stocks on real fundamentals like i was with silver
Agl current pe is 7 ish, is selling a product which can not be replaced completely and critical
The narative is: it is old technology, coal burning, etc
But the write down they just took is on wind farms..yes..not fitting well with reset...
https://www.smh.com.au/business/com...-7b-in-asset-write-downs-20210204-p56zj8.html
If you have to buy a stock today at a peak bubble time, earning some dividends and to keep in the next 10y,i still believe it is not a bad bet
And it is not a majjor gas coal producer which tend not to be a bad thing across an economic cycle

 

[qldfrog]

No denying lower electricity price and volume and as a system guy, the trend is not good but i also play some stocks on real fundamentals like i was with silver
Agl current pe is 7 ish, is selling a product which can not be replaced completely and critical
The narative is: it is old technology, coal burning, etc
But the write down they just took is on wind farms..yes..not fitting well with reset...
https://www.smh.com.au/business/com...-7b-in-asset-write-downs-20210204-p56zj8.html
If you have to buy a stock today at a peak bubble time, earning some dividends and to keep in the next 10y,i still believe it is not a bad bet
And it is not a majjor gas coal producer which tend not to be a bad thing across an economic cycle

Time will tell... years.. probably suited to dollar averaged investment in a basket of stocks

 

[So_Cynical]

It seems to me that all electric utility companies have been in a massive bear market these last 12 months.

Can anyone explain why? The means of generating electricity is so cheap now so these stocks should be doing well right.

Also what do we see as potential price floor for AGL? It's trading cheap at 7PE

Read Smurfs 1st post above - pretty much explains what happening.
--------------
The wheel will turn and high prices return at some point, AGL and ORG seem to be very cyclical businesses as far as profit goes.

I'm thinking about taking a small loss on my recently acquired ORG shares and buying AGL ~ AGL is a better business - right?

 

[qldfrog]

Read Smurfs 1st post above - pretty much explains what happening.
--------------

Indeed and my view is actually positive on medium long term.we just need a few blackouts and they will become favour of the month

 

[aus_trader]

Read Smurfs 1st post above - pretty much explains what happening.
--------------
The wheel will turn and high prices return at some point, AGL and ORG seem to be very cyclical businesses as far as profit goes.

I'm thinking about taking a small loss on my recently acquired ORG shares and buying AGL ~ AGL is a better business - right?

Yeah, I did a quick background check and a quick analysis. However ORG is more involved in the renewable energy space, so it might trade at a premium to good old Australian Gas and Lighting company (AGL).

 

[joeno]

Read Smurfs 1st post above - pretty much explains what happening.
--------------
The wheel will turn and high prices return at some point, AGL and ORG seem to be very cyclical businesses as far as profit goes.

I'm thinking about taking a small loss on my recently acquired ORG shares and buying AGL ~ AGL is a better business - right?

Yes i get electricity spot prices are lower now. That's also what i'm confused about. Why is electricity low and that AGL is trading at 2005 levels? Given everyone's staying at home. Given their costs for generating electricity (through coal, hydro, solar etc) would be low and booming businesses in itself.

They have consistent strong cashflows. Unless they have management issues or losing market share i don't understand how this is not a great pick. They're not going bankrupt. So i'd imagine the margin of safety is huge.

 

[sptrawler]

@joeno producing electricity is a very expensive business, these companies have a lot of money tied up in assetts that nobody likes but everyone needs, so they are having to thrash them to death to keep the lights on.
Meanwhile renewable generation is being installed with no storage, so the renewables push the fossil fueled generators of line, but they have to come back on line when the sun goes down.
This causes thermal stress to machines and they arent on long enough to make money.
It is a similar situation to the car industry, everyone wants EVs but they also want to keep running their ICE car until it is worn out, so the car companies have to keep making parts, which they probably would love to get out of.
This transition period is really hard for the established players, not so difficult for the new entrants with no fossil fueled baggage.lol
But the ranters and chanters dont give a rats about that, as long as they can keep ranting and chanting, common sense doesnt come into it.
The major players are going to have to write down their assetts and spend a whole lot of money replacing them, to maintain thier market share.
In reality the new entrants should be forced to install complimentary storage, when connecting these solar wind farms, it is the only way that it becomes a level playing field.
Only my opinion.

 

[qldfrog]

@joeno producing electricity is a very expensive business, these companies have a lot of money tied up in assetts that nobody likes but everyone needs, so they are having to thrash them to death to keep the lights on.
Meanwhile renewable generation is being installed with no storage, so the renewables push the fossil fueled generators of line, but they have to come back on line when the sun goes down.
This causes thermal stress to machines and they arent on long enough to make money.
It is a similar situation to the car industry, everyone wants EVs but they also want to keep running their ICE car until it is worn out, so the car companies have to keep making parts, which they probably would love to get out of.
This transition period is really hard for the established players, not so difficult for the new entrants with no fossil fueled baggage.lol
But the ranters and chanters dont give a rats about that, as long as they can keep ranting and chanting, common sense doesnt come into it.
The major players are going to have to write down their assetts and spend a whole lot of money replacing them, to maintain thier market share.
In reality the new entrants should be forced to install complimentary storage, when connecting these solar wind farms, it is the only way that it becomes a level playing field.
Only my opinion.

And i believe it will happen after a few blackouts

 

[So_Cynical]

They have consistent strong cashflows. Unless they have management issues or losing market share i don't understand how this is not a great pick. They're not going bankrupt. So i'd imagine the margin of safety is huge.

Exactly - AGL and ORG are great picks at the moment, markets turn and stocks go up and down, I would not hesitate to add AGL
to my portfolio at current levels however I already have a sizable ORG position and dont like to double up, get over exposed.

Deep value is my thing and AGL is super appealing at the moment.

 

[Clansman]

Exactly - AGL and ORG are great picks at the moment, markets turn and stocks go up and down, I would not hesitate to add AGL
to my portfolio at current levels however I already have a sizable ORG position and dont like to double up, get over exposed.

Deep value is my thing and AGL is super appealing at the moment.

ORG has never been a great company. It's difficult to get excited about a company that pays overs for WPL's hand me down.
Substitute APA for AGL and OSH for ORG and you will do far better in the long term, probably the medium and short term as well.

 

[joeno]

ORG has never been a great company. It's difficult to get excited about a company that pays overs for WPL's hand me down.
Substitute APA for AGL and OSH for ORG and you will do far better in the long term, probably the medium and short term as well.

It's hard to get excited about stocks that may be able to deal with current problems within the industry somewhat better. But with far less attractive valuations - PE, growth, balance sheet.

 

[Clansman]

It's hard to get excited about stocks that may be able to deal with current problems within the industry somewhat better. But with far less attractive valuations - PE, growth, balance sheet.

AGL and ORG were capital killers long before "current problems" within the industry.
It's hard to envisage them doing anymore than reverting to type moving forward.

 

[aus_trader]

I thought these type of plain vanilla utility companies were just the type of thing you want in a dividend portfolio of blue chip stocks...