Analysts response: Macquarie - TP $5.08Ugly, at rock bottom, it...

Analysts response:

Macquarie - TP $5.08

Ugly, at rock bottom, it only looks better

• The positive in the announcement was APLNG. APLNG production for the

quarter was 173PJ (MRE 177PJ) and 701PJ for the year (guidance 685-

705PJ). Dividend paid to ORG was $709m for FY21 (MRE $713m, guidance

above $650m). ORG flagged cashflow of +$1bn in FY22 (MRE $1.3bn) from

APLNG based on US$68/bbl.

• The positive stopped there. ORG indicated a DITL of $0.67bn being brought

back on balance sheet, with up to $0.8bn still in a contingent liability. Non-cash

today, but will be cash tomorrow, albeit with a franking credit. Issue for

investors is with debt reduction necessary, paying tax at the ORG level will

slow the process.

JP Morgan - TP $5.45

Very weak Energy Markets EBITDA guidance driven

by higher fuel costs

• While Origin released a strong quarterly production report, the performance is likely to be overshadowed by

very weak Energy Markets guidance for FY2022-23 and expected asset impairments

• APLNG Strong quarterly revenue and reasonable production.
• Realised LNG prices in line with peers with higher than expected domestic gas prices.
• Weak energy markets guidance for FY2022 and FY2023
• Non cash impairment charges of A$1,578 million for FY2021

Morgan Stanley - TP $4.88

FY22 Energy Markets guidance is 24% lower than ourestimate, FY23 in line-ish

• ORG released Energy Markets (EM) EBITDA guidance of A$450-600m for FY22

(MSe A$688m, Visible Alpha consensus A$711m) and A$600-850m for FY23

(MSe A$768m, consensus A$820m)

• *ORG left FY21 EM guidance of A$940-1,020m unchanged, implying a fall of

46% YoY at the midpoint, attributed to falling electricity prices and rising fuel

costs which partially ease in FY23

• *ORG received FY21 APLNG distributions of A$709m (MSe A$697m) and guided

for FY22 >A$1b net of hedging (MSe A$1.3b) at US$68/bbl and AUD/USD at 0.75

• *ORG will recognise post-tax impairments of ~A$1.6b resulting from lower

electricity prices, and an A$0.7b deferred tax liability as APLNG transitions from

returning capital to distributing earnings

• *ORG's 4Q21 report had few surprises (APLNG production stable, electricity

volumes recovered on weather, and commercial gas market share declines

continued)

• We anticipate a negative reaction to ORG's EM guidance, which we also view as

having negative read-through to AGL.

Morgan Stanley - TP $4.50

4Q21: FY22 & 23 Energy Markets guidance provided,FY23 12% below cons, A$2.3bn

impairments

Expected market reaction: NEGATIVE

• FY23 guidance will likely take more importance than FY22, as could be seen as steady state. FY23

Energy Markets EBITDA Guidance is 12% below Visible Alpha consensus at the midpoint, though

10% above CS. We note that both CS forecasts and consensus do fall within the guidance range.

• FY22 APLNG cashflow guidance net of hedges is inline with CSe.
• 4Q21 report- Integrated Gas revenue inline with CS forecasts. Energy Markets volumes above

forecast, particularly for retail electricity customers.

Guidance

• FY22 Energy Markets guidance A$450-600mn EBITDA, midpoint 26% below Visible Alpha

consensus A$711mn, 22% below CSe A$673mn.

• More recently, elevated coal and gas prices have led to higher than expected generation fuel costs

in the electricity business.

• Higher gas supply costs are expected to be partially offset by repricing of retail customer tariffs.

• FY22 distributions from APLNG net of ORG oil hedging expected "greater than A$1bn",

inline with CSe A$1.1bn (A$1.26bn distributionless A$150mn loss from hedging and

premium.

• FY23 Energy Markets guidance A$600-850mn EBITDA, midpoint 12% below Visible Alpha

consensus A$819mn, 10% aboveCSe A$658mn.

• The outlook for the business improves from next year, with Origin expecting to see a material

rebound in Energy Markets earnings, based on the commodity price outlook and supported by

disciplined cost management.