AGL Energy and Market Trends Analysis

This assignment requires a detailed analysis of AGL Energy Limited (ASX: AGL) including its financial health, key performance indicators, and the impact of external market trends on its operations. The analysis should also encompass insights into the iron ore industry, specifically focusing on Rio Tinto's performance and the fluctuating iron ore price. Sources from reputable financial websites are to be used for this analysis.

International Finance
1

Requirement-1a
List of Stocks
Australia-based MNC
Name of Company Ticker
symbol
Amount of
Investment
Price per share
at
purchase (17
Nov 2017)
RIO TINTO RIO.AX $10,000.00 70.89
AGL Energy Limited AGL.AX $10,000.00 24.93
Foreign stocks (ADRs)
Name of Company Country
where
company
is based
Ticker
symbol
Amount of
Investmen
t
Price
per
share at
purchase
(17 Nov
2017)
UNIVERSAL COAL PLC UK UNV.AX $10,000.00 0.19
VISIONEERING
TECHNOLOGIES, INC.
USA VTI.AX $10,000.00 0.38
2

Week Wise Stock Performance
Week-1: 11/24/2017
Name of company
Stock price
at end
of the week
Percentage
change in
stock price Primary reason
Rio Tinto Limited 72.10 2.82%
Company announces to buy a 32%
share in Saskatchewan Inc. worth
$4.8bn. (Bloomberg, 2017).
AGL Energy Limited 23.90 -4.13%
Negative sentiments towards the
entire energy sector. All stocks
down.
UNIVERSAL COAL PLC 0.19 0.00%
Lack of fluctuation due to majority
private holding
VISIONEERING
TECHNOLOGIES, INC. 0.39 2.63%
Analysts declare double digit
growth for healthcare industry in
2018 (Yahoo Finance, 2017)
Portfolio (average) 0.33%
Week-2: 12/01/2017
Name of company Stock price
at end
of the week
Percentag
e change
in
Primary Reasons
3

stock price
Rio Tinto Limited 71.17 -2.36%
Price down on minor speculation
about changing leadership. Rio
Tinto looking for a new chairman.
AGL Energy Limited 25.22 5.52%
Victorian government has
announced rebates for customers of
AGL Energy. Outcome celebrated
by investors (The Motley Fool,
2018)
UNIVERSAL COAL PLC 0.19 0.00%
Private holding. No external demand
or supply affecting the stock price.
VISIONEERING
TECHNOLOGIES, INC. 0.36 -7.69%
Technology stocks drop on massive
sell off (Financial times, 2017).
Portfolio (average) -1.13%
Week-3: 12/08/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price Primary Reasons
Rio Tinto Limited 69.20 -2.77%
Iron ore prices fall and remain in a
longer term bear market (Yahoo
Finance, 2017)
4

AGL Energy Limited 25.82 2.38%
Shares high on broker updates
leading to positive sentiments.
UNIVERSAL COAL PLC 0.19 0.00%
Lack of fluctuation due to majority
private holding
VISIONEERING
TECHNOLOGIES, INC. 0.44 22.22%
New director appointed leading to
positive sentiment in the market.
(Biotech Dispatch, 2017).
Portfolio (average) 5.46%
Week-4: 12/15/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price Primary Reasons
Rio Tinto Limited 70.57 1.98%
Rio Tinto lowers capital spending,
shareholders expect higher returns
(Yahoo Finance, 2017)
AGL Energy Limited 24.52 -5.03%
AGL Energy limited debt to equity
ratio is 45.72%. Signifying the
company’s debt could pose threats.
(Simply Wall street, 2017).
UNIVERSAL COAL PLC 0.19 0.00%
No movement in the industry.
Private holding keeps stock stable.
5

VISIONEERING
TECHNOLOGIES, INC. 0.45 2.27%
Positive sentiments continue after
speech from the new leadership.
Portfolio (average) -0.20%
Week-5: 12/22/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price
Rio Tinto Limited 74.28 5.26%
Relative strength rating of Rio Tinto
rises from 77 to 81 (Investor’s
business daily, 2017).
AGL Energy Limited 24.39 -0.53%
Minor loss on negative speculations
of investors.
UNIVERSAL COAL PLC 0.19 0.00%
Lack of fluctuation due to majority
private holding
VISIONEERING
TECHNOLOGIES, INC. 0.49 8.89%
Healthcare Biometrics Market
Expected to Reach USD 5.6 billion
by 2022 With VTI as key player
(Herald Keeper, 2017).
Portfolio (average) 3.40%
6

Week-6: 12/29/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price Primary Reasons
Rio Tinto Limited 75.81 2.06%
Glencore and Apollo bid for coal
mines of Rio Tinto. Rio plans to
diversify its portfolio away from
coal (Bloomberg, 2017).
AGL Energy Limited 24.36 -0.12%
Minor loss on negative speculations
of investors.
UNIVERSAL COAL PLC 0.19 0.00%
Lack of fluctuation due to majority
private holding
VISIONEERING
TECHNOLOGIES, INC. 0.55 12.24%
Positive sentiments from last week
drive growth.
Portfolio (average) 3.55%
Week-7: 01/05/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price Primary Reasons
Rio Tinto Limited 78.25 3.22% Share value gains on positive
7

sentiment across market.
AGL Energy Limited 24.32 -0.16%
Minor loss on negative speculations
of investors.
UNIVERSAL COAL PLC 0.20 5.26%
Increase in revenues leading to
increased share value
VISIONEERING
TECHNOLOGIES, INC. 0.54 -1.82%
Small sell off. Market relaxing after
two week of buying.
Portfolio (average) 1.62%
Week-8: 01/12/2017
Name of company
Stock price
at end
of the week
Percentag
e change
in
stock price Primary Reasons
Rio Tinto Limited 80.62 3.03%
Speculations on iron ore hitting
$100 in 2018 raises expectations
(Yahoo Finance, 2018)
AGL Energy Limited 24.25 -0.29%
UBS downgrades oil stocks leading
to negative sentiment (Yahoo
Finance, 2018).
UNIVERSAL COAL PLC 0.20 0.00%
Stable earnings per share. Stable
stock. Stable share value.
VISIONEERING 0.54 0.00% Stable market
8

TECHNOLOGIES, INC.
Portfolio (average) 0.69%
Requirement-1b
Requirement-2
RIO TINTO vs. ASX 200
Figure 1: RIO TINTO vs. ASX 200
From the chart presented above, it could be observed that there the trend in RIO’s stock is
largely independent of the trend in ASX 200 (market index). This is due to wide spread business
of the company in many countries across the globe. However, the RIO’s stock is still positively
correlated by the moves in the market index (ASX 200) but the dependence and the relation is
minute.
AGL Energy Limited vs. ASX 200
9

Figure 2: AGL Energy Limited vs. ASX 200
From the chart presented above, it could be observed that the stock is mostly independent
of the index (ASX 200). In the month of April, stock moved upward but the market was stagnant
with minor upside movement. Further, the month of August and September saw a major drop in
the stock, but the market was again stagnant with some minor upside movement. This shows that
the movements in the stock’s price are not purely driven by the Australian stock market.
Requirement-3-a
UNIVERSAL COAL PLC vs. FTSE 100
10

Figure 3: UNIVERSAL COAL PLC vs. FTSE 100
It could be observed that the stock’s price went up in the month of July with overall
market being stagnant as shown by the trend in FTSE 100. From the month of October, the
market conditions started improving as shown by the upward trend in FTSE 100 and with the
improvement in the overall market, the stock also showed rising trend. However the rise in the
stock is much higher than the market (FTSE 100). This shows that the market price of the stock
is not driven to a large extent by the local market conditions in the UK.
VISIONEERING TECHNOLOGIES, INC. vs. FTSE 100
11

Figure 4: VISIONEERING TECHNOLOGIES, INC. vs. FTSE 100
From the month of May to the middle of June, the stock was falling down however FTSE
100 could be seen to be moving slightly upside. In the month of September, the stock showed
downward trend and the FTSE 100 showed declining. However, from October to December, the
stock showed same trend as that shown by FTSE 100 but with a much larger intensity. This
implies that the price of stock is affected to some extent by the local market conditions.
Requirement-3b
UNIVERSAL COAL PLC vs. VISIONEERING TECHNOLOGIES, INC.
12

Figure 5: UNIVERSAL COAL PLC vs. VISIONEERING TECHNOLOGIES, INC.
The chart shows that UNIVERSAL COAL PLC was increasing at higher speed compared
to VTI in the months of July and August. In the month of October and November too, the rise is
UNV was much larger than VTI. VTI also fell down in later part of December but it was not that
severe. Therefore, it could be interpreted that UNV and VTI are positively correlated with each
other.
Requirement-3cUNV vs. ASX 200
13

Figure 6: Universal Coal PLC vs. ASX 200
It could be observed that UNV was down from March to June. During this period, the
Australian stock market was stagnant as depicted in the somewhat straight ASX 200. From the
month of June, the ASX 200 continued to be stagnant but UNV showed a large rise. This implies
that the stock price of Universal Coal PLC (foreign stock-UK) is not affected by the Australian
Stock Market.
VISIONEERING TECHNOLOGIES, INC. vs. ASX 200
Figure 7: VISIONEERING TECHNOLOGIES, INC. vs. ASX 200
The stock is showing volatility in the months of June, July and December making several
ups and downs. However, the ASX 200 was down in June but picked up again in July. The ASX
200 went down from mid-August and it continued till the start of September. VTI was severely
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down since May but it recovered awesomely and rose sharply in the first week of December. It
could be observed the market (ASX 200) was down but the stock kept rising. Thus, it reflects
that the stock’s price is largely independent of the movements in ASX 200.
Requirement-4
RIO TINTO operates its business in many counties across the globe thus it is exposed to
foreign currency risk against many currencies. However, the most of sales of the company is
realized in US dollar so it can be interpreted to it is most exposed to US dollar.
11/17/2017
11/23/2017
11/29/2017
12/5/2017
12/11/2017
12/17/2017
12/23/2017
12/29/2017
1/4/2018
1/10/2018
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
RIO Stock and Exchange Risk
USD to AUD
RIO Stock Price
Axis Title
Figure 8: RIO Stock and Exchange Risk
From the chart presented above, it could be observed that the USD appreciated against
AUD in the first and second week of December. The appreciation in USD against AUD affects
receivables of the company negatively. The impact of appreciation in exchange rates could be
seen on the stock price in the week-3 and 4 December. It was observed that on 29th December,
the USD depreciated by 1.26% which caused the percentage change in stock price to go down.
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Therefore it could be articulated that the price of the stock is largely independent of the currency
exchange movement.
AGL has businesses in many countries internationally apart from Australia so naturally
the company is exposed to the risk of foreign current. The most of the sales of the company is
realized in US dollar so it could be interpreted that the company is most exposed to US dollar.
11/17/2017
11/23/2017
11/29/2017
12/5/2017
12/11/2017
12/17/2017
12/23/2017
12/29/2017
1/4/2018
1/10/2018
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
AGL Stock and Exchange Risk
USD to AUD
AGL Stock Price
Axis Title
Figure 9: AGL Stock and Exchange Risk
The impact of change in the currency exchange rates on AGL could be observed to be
more severe than in RIO. The stock’s price has been highly volatile with decreasing trend over
the period. The depreciation of USD against the AUD in the later part of December has affected
the price of stock badly.
Requirement-5
UNV vs. Exchange Rate GBP to AUD
16

11/17/2017
11/23/2017
11/29/2017
12/5/2017
12/11/2017
12/17/2017
12/23/2017
12/29/2017
1/4/2018
1/10/2018
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
UNV Stock and Exchange Rate GBP to
AUD
GBP to AUD
UNV Stock Price
Axis Title
Figure 10: UNV Stock and Exchange Rate GBP to AUD
UNV is basically a UK based company; therefore the exchange rate between GBP and
AUD has been taken for analysis. On 01 December 2017, the exchange between GBP and AUD
showed positive movement. A slight depreciation in the currency is shown in the week starting
20 December 2017, but the stock has shown a sharp rise. It can be stated that the stock is largely
independent of the currency movements.
VISIONEERING TECHNOLOGIES vs. Exchange Rate USD to AUD
17

11/17/2017
11/20/2017
11/23/2017
11/26/2017
11/29/2017
12/2/2017
12/5/2017
12/8/2017
12/11/2017
12/14/2017
12/17/2017
12/20/2017
12/23/2017
12/26/2017
12/29/2017
1/1/2018
1/4/2018
1/7/2018
1/10/2018
0
10
20
30
40
50
VTI Stock and Exchange Rate GBP to
AUD
Figure 11: VTI and Exchange Rate USD to AUD
Visioneering technologies Inc. was established in the United States, therefore, the
exchange rate between the USD and AUD has been considered for analysis. From the chart, it
could be observed that VTI does not bear any specific relationship with the exchange rate of
USD and AUD. At the start of the period, both the charts are going together however, once the
stock price of VTI rose, the currency remained stagnant. Further, the same trend could be
observed at the end of the period.
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References
Biotech Dispatch, 2017, ‘New director for visioneering technologies’,
https://biotechdispatch.com.au/news/new-director-for-visioneering-technologies, retrieved on 21
January, 2018.
Bloomberg, 2017, ‘Glencore, Apollo bid for Rio Tinto’,
https://www.bloomberg.com/news/articles/2017-12-20/glencore-apollo-said-to-bid-for-rio-s-1-5-
billion-coal-assets?
utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=
yahoo, retrieved on 21 January 2018.
Bloomberg, 2017, ‘Rio Tinto’s M&A madness’,
https://www.bloomberg.com/gadfly/articles/2017-11-20/rio-tinto-s-buying-again-expect-an-
unhappy-ending-for-lithium?
utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=
yahoo, retrieved on 21 January 2018.
Financial times, 2017, ‘Tech stocks drop on broad sell of’, https://www.ft.com/content/3646ef2d-
9bbb-3aa8-8008-853fa0363c5c, retrieved on 21 January, 2018.
Herald Keeper, 2017, ‘Healthcare Biometrics Market Expected to Reach USD 5.6 billion by
2022 With Prominent Key Players’, http://heraldkeeper.com/news/healthcare-biometrics-market-
expected-reach-usd-5-6-billion-2022-prominent-key-players-40943.html, retrieved on 21
January, 2017.
Investor’s business daily, 2017, ‘Stocks Showing Rising Market Leadership: Rio Tinto Earns 81
RS Rating’, https://www.investors.com/ibd-data-stories/stocks-showing-rising-market-
leadership-rio-tinto-earns-81-rs-rating/?src=A00220&yptr=yahoo, retrieved on 21 January 21,
2018.
Simply Wall Street, 2017, ‘AGL Energy Limited (ASX: AGL): Time for a Financial Health
Check’, https://simplywall.st/news/agl-energy-limited-asxagl-time-for-a-financial-health-check/,
retrieved on January 21 2018.
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