We looked at AGL after their solid result in February Here and not much has changed since. The current oil shock is a modest net positive for AGL in the near term – elevated wholesale prices are flowing directly to the bottom line, and the company’s generation portfolio is well positioned to capture that upside. The risk is on the retail side and from Canberra, where a government facing a cost-of-living election environment may intervene to cap energy prices, which would be the single biggest threat to AGL’s current earnings trajectory.
We believe AGL is too complex, too politically sensitive, and too capital-intensive to be a clean private capital target. AGL is mid-transition, retiring coal, building renewables, and the regulatory and reputational risk of taking it private during an energy transition makes it unappealing to most institutional buyers. Mike Cannon-Brookes tried and failed to force a restructure in 2022. We believe the story here is transformation, not takeover.
- We like AGL for its 5.2% fully franked yield: MM owns AGL in its Active Income Portfolio.
MM is long and bullish AGL for yield
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