Business SummaryAGL Energy Limited (AGL) is an integrated energy company and owner,operator and developer of renewable energy generation in Australia. It has adiverse power generation portfolio including base, peaking and intermediategeneration plants, spread across traditional thermal generation as well asrenewable sources including hydro, wind, landfill gas, solar and biomass. TheCompany has Three operating segments which are Energy Markets, GroupOperations and Investments. Since Other not consider to be reportablesegment of the company.

Latest ResearchDeeper earnings trough, downgrading FY22 NPAT to $506m

A deeper FY21 earnings trough — FY21 NPAT guidance of A$560-660mwas well

below Citi’s forecast of A$779m, largely due to gas book repricing beingworse than feared and a higher cost base in Group Ops. Consensus hadforecast A$710m. We now forecast A$596m and show our earnings bridgein Figure 1.

For more information see full research report 14 Aug 2020.

GICS - Utilities

AGL Energy Limited

ASX Code: AGL Price: $13.72 12 Mth Target Price: $14.49 Rating: Neutral

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

30 November 2020$8,548m623.0m$21.23$12.46

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Neutral$14.492.4%5.7%8.1%

Investment FundamentalsFYE 30 Jun 2020A 2021F 2022F 2023F

Profit $m 816.0 596.0 506.0 633.0Profit (norm)* $m 816.0 596.0 506.0 633.0

EPS* ¢ 127.0 96.0 81.0 102.0EPS Growth % -21.1 -24.4 -15.6 25.9P/E* x 11.1 14.7 17.5 13.9P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 98.0 96.0 81.0 76.0Yield % 6.9 6.8 5.7 5.4Franking % 80.0 0.0 0.0 80.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2016A 2017A 2018A 2019A 2020A

Sales Revenue 11,150 12,359 12,816 13,050 11,949Total Revenue ex. Int. 11,175 12,584 12,847 13,300 12,160EBITDA 1,195 1,472 3,029 2,127 2,388Depreciation & Amort. -465 -484 -558 -625 -756Goodwill Amortisation -- -- -- -- --EBIT 730 988 2,471 1,502 1,632Net Interest -218 -224 -213 -193 -179Profit Before Tax 512 764 2,258 1,309 1,453Income Tax -109 -225 -669 -374 -410Outside Equity Int. -1 -- -- -- --Profit after Tax 402 539 1,589 935 1,043Significant Items after Tax -810 -- -2 -30 -28Reported Profit after Tax -408 539 1,587 905 1,015Preferred Dividends -- -- -- -- --

Cash Flow ($M)2016A 2017A 2018A 2019A 2020A

Receipts from Customers 11,903 13,552 14,157 14,426 13,333Funds from Operations 1,506 1,336 2,417 1,986 2,497Net Operating Cashflow 1,186 891 2,134 1,599 2,156Capex -545 -498 -720 -915 -758Acquisitions & Investments -63 -83 -77 -89 -88Sale of Invest. & Subsid. 673 -- 173 129 --Net Investing Cashflow 81 -302 -629 -904 -879Proceeds from Issues 1 -480 -10 -5 -7Dividends Paid -446 -517 -682 -774 -719Net Financing Cashflow -1,274 -687 -1,196 -1,043 -1,252Net Increase Cash -7 -98 309 -348 25Cash at Beginning 259 252 154 463 115Exchange Rate Adjust. -- -- -- -- 1Cash at End 252 154 463 115 141

Ratios and Substantial Shareholders2016A 2017A 2018A 2019A 2020A

Profitability RatiosEBITDA Margin % 10.72 11.91 23.63 16.30 19.98EBIT Margin % 6.55 7.99 19.28 11.51 13.66Net Profit Margin % 3.61 4.36 12.40 7.16 8.73Return on Equity % 5.08 7.12 18.94 11.08 12.92Return on Assets % 3.89 4.88 11.92 7.27 7.96

Debt/Safety RatiosNet Debt/Equity % 36.03 42.14 28.34 32.41 36.74Interest Cover x 3.35 4.41 11.60 7.78 9.12

Top 5 Substantial ShareholdersBlackRock Group 6.1%The Vanguard Group Inc. 6.0%State Street Corporation and subsidiaries 5.0%

Balance Sheet ($M)2016A 2017A 2018A 2019A 2020A

Cash & Equivalent 252 154 463 115 141Receivables 1,975 1,944 1,891 1,703 1,571Inventories 414 351 370 388 400Other Current Assets 499 975 1,008 1,190 1,010Current Assets 3,587 3,625 3,806 3,396 3,122Prop. Plant & Equipment 6,529 6,447 6,685 6,588 6,640Intangibles 3,232 3,286 3,271 3,740 3,786Other Non-Current Assets 543 975 1,008 1,190 1,035Non-Current Assets 11,017 10,833 10,833 11,425 11,588Total Assets 14,604 14,458 14,639 14,821 14,710Interest Bearing Debt 3,108 3,346 2,841 2,850 3,108Other Liabilities 3,570 3,538 3,408 3,533 3,527Total Liabilities 6,678 6,884 6,249 6,383 6,635Net Assets 7,926 7,574 8,390 8,438 8,075Share Capital 6,696 6,223 6,223 6,223 5,603Reserves -24 16 -102 -33 -80Retained Earnings 1,243 1,335 2,269 2,248 2,552Outside Equity Int. 11 -- -- -- --Total Shareholders Equity 7,926 7,574 8,390 8,438 8,075

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Ms Melinda HunterMr John Patrick Fitzgerald

Directors

Mr Peter Robert Botten(Non-Executive Director)Mr Mark Bloom(Non-Executive Director)Mr John Victor Stanhope(Non-Executive Director)Ms Diane Lee Smith-Gander(Non-Executive Director)Mr Graeme Peter Hunt(Non-Executive Director,Non-ExecutiveChairman)Ms Patricia McKenzie(Non-Executive Director)Ms Jacqueline Cherie Hey(Non-Executive Director)Mr Brett Alan Redman(Chief Executive Officer,Managing Director)

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AGL Energy Limited

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