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Thursday, 7 October 2021

ORG - ORIGIN ENERGY LIMITED

UBS rates ORG as Buy (1) - UBS expects green hydrogen demand to grow and in conversation with management learns of Origin Energy's forecast for H2 exports from Australia in the range of 20-35mtpa by 2050.

The company considers it is well placed to compete, given its advantage of proximity to Asia, low geopolitical risk and high caacity for renewables.

Management thinks the main technical challenge for scale H2 production in Australia is the decision surrounding which H2 carrier to utilise for transport to Asia. The Buy rating and $5.15 target are maintained.

Target price is $5.15 Current Price is $5.02 Difference: $0.13 If ORG meets the UBS target it will return approximately 3% (excluding dividends, fees and charges). Current consensus price target is $4.99, suggesting downside of -0.6%(ex-dividends)The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 19.50 cents and EPS of 24.00 cents . At the last closing share price the estimated dividend yield is 3.88%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.92. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.4, implying annual growth of N/A. Current consensus DPS estimate is 18.6, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 21.5.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 24.00 cents and EPS of 25.00 cents . At the last closing share price the estimated dividend yield is 4.78%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.08. How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.4, implying annual growth of 38.5%. Current consensus DPS estimate is 26.3, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 15.5.

Market Sentiment: 0.7All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources