AMP is a worse company in almost every single way. Employees hated working there (glassdoor reviews). It's got no moat. Who even used / heard or someone buying an AMP product? Whereas everyone uses either AGL or Energy Australia. Totally different sector.
Will not contest that, but if you have a best pe around and a business which is still around in 10y, i would not discount that eitherWhether AMP is a worse or better company in every single way than AGL is a truth or fiction that is yet to play out, however it's an unattractive and unproductive way to be thinking about investing. What is truth and has been for many years is that there is plenty of smart money and mum and dad investors that aren't willing to find out whether it is a worse or better company. The lowest share price for nearly 19 years is proof of that.
Will not contest that, but if you have a best pe around and a business which is still around in 10y, i would not discount that either
I haven't followed AGL and I must agree with you if your analysis of the management is correct, there have been many good companies go down due to poor management.I never said it wasn't a totally different sector. AGL has far more in common with AMP than it does BHP or APA.
An increasingly narrowing moat, poor management and last but not least, the long term decline in share price which is the hallmark of all capital killers.
I doubt agl had among the best pe around 19y ago, luckily these investors went into hyped new renewable energy stocks ..i mean like..for the one which cost me money:Try telling that story to the investors that have been around for the last 10 years?
Comparing AGL with AMP:
AMP = Company that most Australians have heard of and which "does something with finance" but they're not really sure exactly what. The company's brand value has been trashed and there's no actual need for anyone to use anything they offer.
AGL = Owns medium term (~15 years is medium term in this context) critical infrastructure and reality is that no matter which electricity company you sign up with, if you're in NSW, SA or especially Victoria then AGL is involved with your physical supply chain.
If the company sinks then it'll be due to management alone is my point. The underlying industry is set for massive growth, best explained by pointing out that electricity has a 23% share of secondary energy, that is energy supplied to consumers, in NSW and it's 20% in SA and 17% in Victoria (Australian government statistics).
Everyone from progressive, and even conservative in many cases, governments through to the likes of Elon Musk and Bill Gates want that figure to be very much higher. We're heading into an increasingly electrified world, not one that involves continued dominance of oil and gas at the point of consumption.
If AGL somehow fails then it'll be a company-specific management problem that does it. There's certainly others in the industry quietly getting on with it and preparing for the future in a way that doesn't involve bashing heads with anyone.
That said, I certainly wouldn't deny that the company's former CEO wasn't at all helpful. It takes quite some doing to get everyone from the unions to the Liberal Party against you and the fallout from that sort of thing takes years to overcome. I mention politics since in this business it's inescapable, that's the reality of it, so no point trying to pretend otherwise.
IMO and it is only my opinion, the main problem the major generators have is their competition are in reality passive generator, once it is built the upkeep is minimal.Gaurav wrote this article nearly 7 years ago. He was absolutely on the money.
Electricity disrupted - Part 1
Since the GFC, European power utilities have fared worse than the continent's shaky banks. Gaurav Sodhi explains how solar power has disrupted the power sector. Find out more at Intelligent Investor.www.intelligentinvestor.com.au
Electricity disrupted - Part 2
The venerable electricity business has become vulnerable. We examine the impact on AGL, Origin, Spark, SP Ausnet and their smaller competitors. Find out more at Intelligent Investor.www.intelligentinvestor.com.au
On a cynical commercial side, agl and other should and will let all maintenance and upkeep go down, then when people are actually all upset after oldies dying like flies in the bext heat wave and matching blackout just say: go and put more windmills, look we are 0 carbon business in 2030, don t blame us, and then they will get proper pricing for their base load.IMO and it is only my opinion, the main problem the major generators have is their competition are in reality passive generator, once it is built the upkeep is minimal.
This gives the renewables a massive ongoing advantage as well as minimal regulatory costs, apart from upgrading the front end technology occasionally as the regulator requires it.
Another problem the thermal generators have is, they have to keep the lights on and are getting less and less for doing so.
Like I stated earlier, as with motor vehicle manufacturing, they have to accept the reality and transition while they have a customer base and are making money.
The opportunity wont last forever and the last thing I would be doing, is hoping the problem is going to go away.
I don't hold any elect utility shares.
One offor the irony of it, AGL on of my only green today LOL
On a cynical commercial side, agl and other should and will let all maintenance and upkeep go down, then when people are actually all upset after oldies dying like flies in the bext heat wave and matching blackout just say: go and put more windmills, look we are 0 carbon business in 2030, don t blame us, and then they will get proper pricing for their base load.
There's really two categories of operators in the industry:On a cynical commercial side, agl and other should and will let all maintenance and upkeep go down, then when people are actually all upset after oldies dying like flies in the bext heat wave and matching blackout just say: go and put more windmills, look we are 0 carbon business in 2030, don t blame us, and then they will get proper pricing for their base load.
There's really two categories of operators in the industry:
Gentailers who own firm generating capacity and a retail business.
"Pure" generators or retailers who do one or the other but not both.
The latter are ultimately either exposed to the spot market, are reliant upon some form of hedging contract directly with someone else or are hedging by means of futures. Versus the former who have effectively indefinite or at least very long term hedging via their own retail business and long term contracts with independent generators (often but not always of 25 year duration) and major industrial consumers (typically 4 - 30 years duration).
Once the next crisis comes around, and every now and then the industry has one in terms of pricing, well then you get to find out which of the "pure" retailers and generators didn't do their hedging so well and which ones got it right. That's the point where those who didn't do it well abruptly exit the market with a fire sale of their account base to someone else.
Ultimately AGL, Alinta, Delta Electricity, Energy Australia, Engie, Hydro Tasmania, Infigen, Origin, Snowy Hydro and the various Queensland government owned entities (CS Energy, CleanCo, Stanwell, Ergon) have far less business risk than the others. They can certainly lose money, but the others are ultimately far more exposed - usually with a much smaller capital base as well.
Infigen is gone
Infigen are gone, They were taken over after years of underperformance and being riddled with debt. They are out of business. Accept you didn't know about it and deal with it. Nice attempt at the post mistake edit though... but you got caught out.A change of ownership, now being wholly owned by another group, doesn't mean they're not still in business and competing against some (but not all) of AGL's business.
Same as Energy Australia being owned by CLP Group doesn't mean they aren't a direct large scale competitor to AGL.
That the company was absorbed by another company doesn't change the fact that it's still physically in operation and still doing business.Infigen are gone, They were taken over after years of underperformance and being riddled with debt. They are out of business. Accept you didn't know about it and deal with it.
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