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Origin Energy’s balance sheet still raising questions

Investor concern continues to plague Origin Energy (ASX: ORG) despite management’s assurances that its balance sheet has the capacity to fulfill its pipeline of projects under development, including the huge Australian Pacific LNG project.

The latest voice of concern comes from investment bank UBS. According to the Australian Financial Review, UBS analysts suggest there is reason to believe that there is “a constant concern that equity may need to be raised”.

Concerns surrounding the potential for a dilutive capital raising by Origin haven’t helped the company, however there are also general industry-wide issues regarding the outlook for electricity pricing that are affecting all participants. As the chart below shows, Origin Energy and AGL Energy (ASX: AGK), two of the largest electricity retailers, have both significantly underperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) over the past year.

orgchart

Source: Google Finance

Foolish takeaway

Electricity pricing and large developments are tricky issues for investors to analyse. However any short-term issues that don’t become long-term problems could provide attractive opportunities for investors to buy some quality, defensive businesses.

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Motley Fool contributor Tim McArthur owns a share in Origin Energy.

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