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AGL Energy (ASX: AGL) – could benefit from Hazelwood closure

  • Press reports indicate that the Victoria’s 1.6GW Hazelwood brown coal-fired electricity plant is scheduled to permanently close in March next year.
  • The plant supplies 22% of the coal-fired generation capacity in Victoria and 6% of the total coal-fired capacity in VIC, QLD, and NSW combined.
  • Some analysts believe the closure could drive up wholesale electricity prices by 15% in Vic and 10% in NSW.
  • AGL Energy, which owns the rival Loy Lang A power station (2.3GW) in Victoria could benefit from this higher price environment.
  • AGL is currently trading at A$19.28ps, some 3% below IRESS consensus target price of A$19.95, and offers a dividend yield of 4.4% 100% franked). We believe that a total return of ~7%, with the potential for an earnings uplift, could attract increased investor interest.   

3/11/2016 10:37:38 AM

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