AGL - Stock Update
Event Spotlight: AGL Loy Yang outage
AGL Energy Limited (AGL) came out with their announcement for FY22 earnings guidance revision earlier today.
Overall, it’s not surprising seeing an array of downgrades due to the Loy Yang outage which was flagged last month. Notably, FY22 EBITDA guidance was lowered to $1,230m-$1,300m from $1,275- $1,400m and underlying FY22 NPAT guidance was lowered to A$220-270m from $260m-$340m.
The outage brings an estimated total financial impact of $73 million pre-tax (~$50m post tax). AGL confirmed that none of the outage related losses are recoverable via insurance which is not completely unexpected as it’s now the second time within three years that this has occurred. As a result, the financial impact is expected to be carried over FY22 and FY23 (~$60m and ~$13m respectively). For more information, please refer to AGL’s market announcement.
Supportive government policy carries a potential short term positive, however the federal election might introduce some disruption due to the uncertainty surrounding post-election policy. The outage came as a short term hit for AGL however the greater energy environment and continuation of the demerger process should be factored in
Company overview
AGL Energy Limited (AGL) is a telecommunications, gas and electricity provider which offers services to individuals and business all over Australia.
The Loy Yang outage was flagged last month so the financial impacts are unfavourable (as mentioned within the ASX release) but relatively understood by the company and its investors. The outcomes of AGL’s demerger need to be monitored to obtain a better understanding on the stock’s direction. Therefore, this supports our investment thesis of a HOLD rating.
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