FY10 underlying NPAT guidance upgraded to $420m-$430m
For a second consecutive year, AGL has increased its full year NPAT guidance. The previous FY10 guidance range of $390m-$420m was provided at the company AGM on 29 Oct 09. The company cited a strong operating performance for the new FY10 NPAT guidance range of $420m-$430m. We previously forecast $421m, and note the consensus mean was $425m. As a result, we are not surprised by the upgrade to guidance. AGL indicated the upgrade was due to strong operations across the company's assets, despite relatively mild weather conditions.
We have market-to-market electricity prices to 1 Jun 10, resulting in a 1.2% increase to our FY10 NPAT to $426m. We retain our $17.05/sh price target and Buy rating for AGL Energy.
Increased guidance points to strong operations and management performance
At the time of AGL's interim result on 26 Feb 10, we wrote on upside risk to the company's full year guidance ("FY10 Interim Result - Guidance maintained despite strong half"). As a result, today's guidance upgrade does not come as a surprise. However, we see the upgrade as further underlining management deliverability, and the strong operating performance of AGL's core assets.
Mark-to-market electricity prices to 1 Jun 10
We have marked-to-market electricity prices for AGL to 1 Jun 10. Electricity prices in southern states have generally outperformed our forecasts, led by two of AGL's key markets: South Australia (+22%) and Victoria (+12%). The table below summarises changes to historic electricity prices relative to our previous forecasts from 1 Jan 10 to 1 Jun 10.
AGK Price at posting:
$13.89 Sentiment: Buy Disclosure: Held
