ERM Power

AU: EPWX

AU$491.9m market cap

AU$1.94 last close

ERM Power is an Australian commercial and industrial energy retailer and trader. It operates an electricity supply business and two gas-fired generation plants. A key area of growth is energy solutions and it recently disposed of the US business.

Investment summary

ERM Power has completed the disposal of the US business and is now fully focused on its core Australian activities (supply, power generation, energy solutions). At the H119 results, management announced a c 30% dividend hike (from A$7 cents to A$9 cents), the introduction of an additional special dividend (A$3 cents) for FY19, a c 10% higher medium-term outlook for unitary margins for its core energy retail business and A$60m reserved for growth investments.

Y/E Jun
Revenue (A$m)
EBITDA (A$m)
PBT (A$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 3127.0 78.4 14.7 (10.5) N/A 3.1
2018A 2047.0 97.5 43.1 12.0 16.1 N/A
2019E 1966.0 90.6 35.4 10.1 19.2 4.3
2020E 2047.0 105.6 50.3 14.5 13.3 4.9
Last updated on 21/03/2019
Industry outlook

While electricity supply activities in Australia remain very competitive with limited growth opportunities, ERM Power has experienced significant positive momentum which led to several upgrades to Australian medium-term profit guidance over the last two years. The energy market in Australia (and globally) is undergoing significant transformation as a result of the energy transition, the emergence of new technology and customer demand for higher energy efficiency and sustainable solutions. We expect the growing Energy Solutions business to take advantage of these changes.

Last updated on 21/03/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (A$m) 54
Forecast gearing ratio (%) 23
Price performance
%
1m
3m
12m
Actual 18.7 27.7 4.9
Relative* 18.0 13.0 1.5
52-week high/low A$2.0/A$1.3
*% relative to local index
Key management
Jon Stretch CEO
James Spence FD
Olga Alexandratos Investor Relations