AGL Energy needs to secure shareholder approval for the strategy to demerge via the scheme vote on 15 June 2022. While the recently released scheme booklet reiterated the strategic rationale to demerge, UBS considers the shareholder vote hasn’t been re-risked.
Despite various company rationales, the analyst feels much of the benefit to demerge is difficult to quantify.
While management assumes more than $40m of sustainable savings to offset the dis-synergy costs, there’s insufficient detail in the scheme documents to backl this assertion up, believes the broker.
The Neutral rating and $8.50 target are retained.
Target price is $8.50.Current Price is $8.20. Difference: $0.30 – (brackets indicate current price is over target). If AGL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).