until there is a strategic decision made as to what AGL will do next - or we have a formal takeover offer... why would the price rise?
AGL has huge unfunded provisions to account for on an aging generation fleet... the big positive is that we HAVE an aging generation that provides all the electricity we need to meet customer demand AND export some onto the grid at these high spot prices with fixed pricing for coal.... POSITIVE CASHFLOW....
what needs to happen from here is that the influx of cash is used appropriately by the company to modernize their generation profile and reduce their COE... best forms of generation to lower that COE are known - wind & solar - both of which are effectively immune to the impacts of global commodity spikes on the resource that they need to operate on (unlike coal & gas).
AGL have until 2025 to sort this out... as then their legacy coal supply for Liddel & Bayswater runs out and those power plants profitability will come under serious scrutiny.
I am personally comfortable in taking a dividend cut in order for future generation growth to be prioritized.
AGL Price at posting:
$8.19 Sentiment: Hold Disclosure: Held
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