Sydney-based green energy marketer Jackgreen forecasts a net profit after tax in the vicinity of $5 million for 2006-07, reported The Australian Financial Review (31 May 2006, p.28). It quotes one analyst as saying it is difficult to project the company’s price-earnings ratio.
Slow start … Jackgreen sells electricity in NSW, Victoria and South Australia entirely sourced from wind farms and hydro generators. Despite a slow start after a backdoor listing in December 2004, it finally received its financial services licence in March last year.
… but unique selling point: While it has had to draw on the support of its institutional investor, Babcock & Brown, and raise a further $2.09 million, Jackgreen has a unique selling point: its renewable energy costs the consumer no more than its coal-based cousins.
Households coming on board: Since March last year, Jackgreen has signed up 10,000 households for three years and hopes to provide electricity for 100,000 homes by June next year. The shares, which listed at 20¢ before falling to 7¢ last year, closed on Monday at 40¢.
Expensive strategy: A fund manager who did not wish to be named says: "Jackgreen’s equal [pricing] strategy has been expensive but it gives people what they want." In 2004, Jackgreen surveyed 3000 households and more that 90 per cent said they would sign up to green energy if it cost them no more than other energy.
Opposition not on strong ground: The analyst says: "The issue is that Origin and others have to generate green energy anyway to meet the government’s 2 per cent target and they then charge the customer more for it."
The Australian Financial Review, 31/5/2006, p. 28
Source: Erisk Net