Brookfield buys into AGL Energy (ASX:AGL)

AGL (ASX:AGL) has announced a company which appears from ASIC searches to be a subsidiary of Brookfield Asset Management has bought 17.2 million shares or 2.56 per cent of the register as at June 24.

AGL has not received any updated acquisition proposal from Brookfield, since the two proposals received earlier this year that were announced to the market.

The company is continuing to focus on the previously announced review of AGL’s strategic direction.

Meanwhile, Credit Suisse expects AGL Energy will revise down guidance for FY22 and FY23 after the June station outages. The broker notes that since May, the Bayswater and Liddell power stations have been performing poorly at a time of exorbitant electricity prices and expects this will cost AGL $150 million. The company has also announced that the Loy Yang A unit2 outage will continue to mid September – an extra six weeks.

This is expected to result in a working capital outflow in the second half as the company meets higher AEMO margin requirements and the broker sharply downgrades FY22 earnings forecasts. On the upside, electricity futures are signalling big price increases in FY24 and the broker’s earnings forecasts sit sharply above downgraded consensus.

Target price rises to $10.40 from $9.30. Outperform rating retained.

Shares are trading 1.8 per cent higher to $8.54.