Founded in 1837, Australian Gas Light was the second company to list on the Sydney Stock Exchange and has become Australia’s largest electricity generator.

Despite its reliable pedigree AGL disappointed this week by announcing on the 9th of February 2023 a Statutory Loss after-tax of A$1075 million. The Market promptly sold down the shares, resulting in a 13% fall of $1.02 to $6.83 by close on Friday February 10.

A$706 million of tax-deductible impairment charges was allowed in September 2022 for its accelerated decarbonization plan to facilitate the switch from reliance on fossil fuels to renewable energy sources.

CEO Damien Nicks in his commentary blamed a fall in earnings on difficult energy market conditions following events such as the closure of Lidell Unit 3 electricity generator in April 2022 and a generator rotor defect of the Loy Yang Unit 2.

Earnings, as reflected in the EBITDA result, was down 16% but the good news is that improvement is projected in the 2H 2023 half, resulting in a FY outcome largely undiminished from forecast, at $1250 to $1375 million.

A technical analysis viewpoint

Technical analysis attempts to assess market sentiment through the scrutiny of price-volume charts. Buy/Sell Signals may be identified, but interpretation is subject to observer error. Remember, Isolated signals may be misleading, so look for stable ongoing trends, and take into account information derived from different timeframes.

I made precisely this mistake this week, not realizing that the half yearly result was imminent. I bought more shares when the share price rose above the 120-day moving average. The six-month daily candlestick chart supplied by Incredible Charts displays what happened the very next day.

The moral of my story is to take note of the company’s calendar. It is often prudent to delay portfolio adjustments until after the release, to see how the market resets the share-price.

1o year weekly chart of AGL

Over six years since April 2017 the share-price of, AGL has fallen from $28 to $5. Although the price has now plateaued somewhat, a clear uptrend has not yet emerged. Knowing that the decline has been associated with a strategy, contrary to the wishes of many climate-change deniers, to move away from fossil-fuel electricity generation to cheaper renewable energy sources.

Accordingly long-term investors may take the opportunity to increase their shareholding rather than stop-loss sell.

Disclaimer

Readers should not rely on this post for guidance, but rather first seek independent financial advice tailored to their own situation.

Categories: Chart Review

Tags: AGL Limited.