Can emerging energy player Genesis Energy Ltd (ASX:GNE) vie with the big guns?

Genesis Energy Ltd (ASX: GNE) aims to become the first choice in energy management for customers.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New Zealand based ASX-listed diversified energy company Genesis Energy Ltd (ASX: GNE) released its annual report today, detailing its strategy to become the first choice in energy management for customers.

Genesis operates across the residential, commercial and industrial sectors in New Zealand, selling natural gas, LPG and electricity.

Its customer churn has improved 5 percentage points to 16% in the first quarter of FY19, with Genesis labelling FY18 "foundational" in terms of integrating its portfolio.

Electricity sales are up 4% while gas sales volume has increased by 8% and while carbon emissions fell, so too did total generation volume, by 15%.

With its 83% drop in NPAT to $20 million for FY18 – off the back of revaluations of $119 million – convincing investors of its worth could prove difficult.

Shareholders may have found its 2% dividend rise to 16.9c per share a sweetener and operating cash flow did increase by 33% to $331 million, but Genesis will likely need to make better inroads in terms of production volume to convince investors.

Genesis shares have had a volatile 12 months but are up 0.4% to $2.25 at the time of writing.

Life is tough as an emerging player in the energy sector, just ask $550 million market cap company Infigen Energy Ltd (ASX: IFN).

The developer and operator of renewable energy generation assets in Australia released its monthly production results today, showing production rises at its Capital, Lake Bonney and Woodlawn wind farms, but a drop in production at Alinta.

Infigen reported a revenue uptick of 7% for FY18 – up $13.4 million on FY17 to $210.1 million.

Its FY18 results showed underlying EBITDA also rose 7% to $149.1 million with NPAT up 41% to $45.7 million and the stabilisation of its business structure seeing corporate costs drop 16% from FY17 to FY18.

Infigen shares are up 0.3% to 57c per share at the time of writing but have not fared well over the last six months, down from a 75c share price high back in June.

Big-name energy players AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) still dominate the space with investors awaiting the announcement of a new AGL CEO by year's end as its shares hover down near 52-week low levels at $19.64.

Integrated energy company Origin has fared better in terms of its share price of late, although down slightly today, Origin shares seem to be back on the incline after all but bottoming out in August after the release of FY18 results.

Origin's reported net profit for FY18 fell short of expectations, with FY19's outlook appearing weaker than expected also.

Origin management warned underlying EBITDA for its energy markets segment would fall between $1.5 billion and $1.6 billion in FY19 compared to an FY18 increase of 21%.

There is no doubt Origin is struggling with intense market competition at present and with AGL shareholders at least getting the benefit of a dividend, Origin really needs to look closely at re-starting its own in FY19.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A male ASX 200 broker wearing a blue shirt and black tie holds one hand to his chin with the other arm crossed across his body as he watches stock prices on a digital screen while deep in thought
Share Market News

5 things to watch on the ASX 200 on Friday

Will the market end the week on a high? Here's what you need to know.

Read more »

A diverse group of people form a circle at a park and raise their arms together.
Share Market News

Here are the top 10 ASX 200 shares today

It was a phenomenal day for ASX stocks this Thursday...

Read more »

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today
Bank Shares

Big ASX news: NAB shares hit 18-year high

The last time NAB shares were at this level was in November 2007.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Broker Notes

5 ASX All Ords shares upgraded to 'strong buy' consensus ratings

Brokers upgraded their ratings on these ASX All Ords stocks last month.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Broker Notes

2 more of the best ASX 200 shares to buy in February

The broker is feeling very bullish about these shares. Let's see what it is saying.

Read more »

Multiracial happy young people stacking hands outside - University students hugging in college campus - Youth community concept with guys and girls standing together supporting each other.
52-Week Highs

These 11 ASX 200 shares are hitting new 52-week highs today

These shares are on form and hitting new highs today. Let's find out what is happening.

Read more »

A man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.
Technology Shares

2 ASX tech stocks to buy during an anticipated 15% to 20% sector pullback in 2025

Expert reveals 2 of his favourite tech stocks and at what prices we should buy them during a dip.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why BWP, Magellan, News Corp, and Winsome shares are pushing higher today

These shares are having a better day than most on Thursday. But why?

Read more »