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.’
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.