Very soft guidance for FY22 Energy Markets earnings (EBITDA) and $2.5bn of non-cash charges overshadowed a solid June quarter result from APLNG, in the opinion of UBS. The guidance is estimated to imply a -47% fall at the midpoint year-on-year.
The broker’s prior forecast expected a -30% fall and factored in lower electricity prices and higher gas procurement costs. This is considered due to failing to hedge exposure to high coal prices, which have risen 70% since May.
Hence, the analyst cuts FY22 Energy Markets earnings by a further -21% to $539m, while at the same time noting FY23 Energy Markets guidance points to a solid recovery from FY22. UBS lowers its price target to $4.75 from $5.15 and retains its Buy rating.
Sector: Energy.
Target price is $4.75.Current Price is $4.25. Difference: $0.50 – (brackets indicate current price is over target). If ORG meets the UBS target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
