reports
- Adrian Atkins
Origin is Tracking Well, But Remains Overvalued
No-moat Origin Energy is tracking well in the financial year to date and management reconfirmed fiscal 2018 earnings guidance. We maintain our earnings forecasts and AUD 7.50 fair value estimate. At current prices, we consider the stock overvalued. We remain cautious over Origin's exposure to volatile oil and gas prices combined with still high debt levels. Debt/EBITDA should be around 4 times in fiscal 2018, which is much more aggressive than peer AGL Energy at 1.7 times despite AGL having more...
- Adrian Atkins
Solid cash flow from energy retailing balances volatility from LNG exp...
No-moat Origin Energy reported a strong first-half 2018 result and upgraded full-year earnings guidance for the core energy markets division by 4%. However, our numbers are little changed as our prior forecast for energy markets was at the top of the prior guidance range and integrated gas earnings are tracking a little weaker than expected because of one-off redundancy costs at Australia Pacific LNG. We maintain our AUD 7.50 fair value estimate and consider the stock overvalued at the current p...
- Adrian Atkins
Solid cash flow from energy retailing balances volatility from LNG exp...
Following the sale of Lattice Energy, we strip its earnings contributions from our Origin Energy forecasts. We also reduce debt by the expected AUD 1 billion in net proceeds, and reduce interest expense to reflect this. The overall impact of the sale on net profit after tax is minor. At the same time, we marginally upgrade forecasts for the continuing business, mainly on the oil price rebound since mid-2017 which boosts earnings from APLNG and some small adjustments to the energy markets divisio...
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