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.
(20min delay)
