AGL Energy Limited

The fund managers believe AGL Energy Limited is well-positioned to benefit from both short-term market dynamics and longer-term structural shifts in the energy sector. In their opinion, the company’s recent upgrade to FY24 earnings guidance—approximately 6% above market expectations—highlights the strength of its current operating performance, particularly in a volatile wholesale pricing environment driven by supply challenges. They note that elevated futures prices are likely to support continued earnings momentum through to FY26. More broadly, the fund managers believe there is a growing recognition that Australia’s energy transition will take longer than previously anticipated, creating an important role for reliable baseload power providers during the interim period. In this context, AGL’s strategic portfolio of baseload assets in Victoria and New South Wales offers it a significant competitive advantage. Additionally, the company’s solid near-term cash generation is expected to provide a strong foundation for funding necessary transition-related capital investments. In their view, AGL combines near-term earnings strength with a credible pathway toward longer-term relevance in a decarbonising energy system, making it an attractive investment opportunity as the energy landscape continues to evolve.