CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Understanding Origin’s FY21 Guidance update in 30 seconds

We examine the key takeaways from the energy company’s latest market release.

The Origin Energy (ORG) share price fell 6.85% on Thursday, 4 February, after the company provided, what the market perceived as a poor FY21 guidance update.

Origin Energy share price: Understanding the guidance update in 30 seconds

For traders, here are the must-know points from Origin’s latest FY21 guidance update:

  • Full-year, FY21 Energy markets underlying earnings (EBITDA) are expected to come in at between $1,000-1,140 million, down from prior guidance of between $1,150-1,300 million
  • Australian Pacific LNG (APLNG) production has been raised to 685-705 petajoules, while distribution breakeven for APLNG was lowered to US$24-28 BOE
  • Cash distribution from APLNG (previously not provided), is now expected in the $575-675 million range
  • Full-year CAPEX is expected to be lower, while corporate costs are expected to be higher

Commenting on this guidance update, RBC analysts – who have a $5.50 price target on ORG – said:

‘Despite this downgrade, Origin continued to have a relatively strong FY21 FCF yield, and with a limited medium term capex spend outlook at ~$400-440m in FY21 per annum, implying potential for a solid dividend.’

However, the broker did add that:

‘Tax losses have also led to limited availability of franking credits and therefore we continue to expect an unfranked / partially franked FY21 dividend at the low end of Origin's targeted FCF range of 30-50% guidance.’

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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