AGL, page-9

Seems there is support for a Buy.
McQ's thoughts..

Australian Gas Light

AGL has announced price rises for SA electricity customers from January 2003. Standard
electricity prices for residential customers will increase by up to 25%, whilst prices for small
business customers will rise by up to 16%.
These price increases comply with the South Australian regulator (SAIIR) guidelines and give
a benchmark retail profit margin of 5%. Given that AGL should be able to reduce costs below
those used by the regulator, a margin in excess of 5% is likely.
Consolidation within the retail energy market has increased general margin expectations from
around 5% to around 6%. However, the presence of competitors being able to offer dual fuel
products to AGL customers (whilst AGL is restricted from doing the reverse) is expected to
prevent the margin exceeding 6%.
We have increased our valuation by 3% to $10.23 to reflect increased earnings. Whilst the
stock is currently trading at a small discount to this valuation, we retain our short term Hold
perform recommendation.
Longer term, we see all retailers benefiting from consolidation within the energy retail market
and maintain our Buy recommendation for AGL.
AGL
Share Price:
$9.76
Short term:
Hold
Long term:
Buy
Risk factor:
Low