QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Capital raise still doesn't quell the uncertainty but stock remains cheap towards the lower end

Origin Energy Blinks First, but Entitlements Offer Value

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Equity Bottom-Up

No-moat Origin Energy plans to divest its conventional upstream gas business via an IPO in 2017 to help reduce its heavy debt load (AUD 9.1 billion in fiscal 2016) and capital expenditure requirements. Financial details will be disclosed at a later date, but we believe proceeds could be more than AUD 1.5 billion. Management expects the sale to be EPS-accretive from fiscal 2019 as interest expense savings offset lost earnings. We make no changes to our forecasts at this stage. We maintain our AUD 5.00 fair valueWe make no changes to our forecasts at this stage. We maintain our AUD 5.00 fair value estimate and consider Origin to be overvalued, with shares currently trading 33% above our valuation. Risk remains high despite progress on repairing the balance sheet.Analyst: Adrian Atkins

No-moat Origin Energy plans to divest its conventional upstream gas business via an IPO in 2017 to help reduce its heavy debt load (AUD 9.1 billion in fiscal 2016) and capital expenditure requirements. Financial details will be disclosed at a later date, but we believe proceeds could be more than AUD 1.5 billion. Management expects the sale to be EPS-accretive from fiscal 2019 as interest expense savings offset lost earnings. We make no changes to our forecasts at this stage. We maintain our AUD 5.00 fair valueWe make no changes to our forecasts at this stage. We maintain our AUD 5.00 fair value estimate and consider Origin to be overvalued, with shares currently trading 33% above our valuation. Risk remains high despite progress on repairing the balance sheet.Analyst: Adrian Atkins

Origin to IPO Conventional Gas Fields to Accelerate Debt Reduction