0R15 8539.0 2.1534% 0R1E 8600.0 3.3654% 0M69 None None% 0R2V 190.25 -0.1312% 0QYR 1345.5 2.0871% 0QYP 424.0 0.5931% 0LCV 146.6464 -1.3147% 0RUK None None% 0RYA 1631.0 -0.6094% 0RIH 171.3 0.9131% 0RIH 174.9 2.1016% 0R1O 186.0 9820.0% 0R1O None None% 0QFP None None% 0M2Z 298.3 -0.6495% 0VSO None None% 0R1I None None% 0QZI 474.5 0.6363% 0QZ0 220.0 0.0% 0NZF None None%
United Utilities Group Plc
United Utilities Group Plc (LON: UU) manages electricity distribution, water distribution and wastewater network in the North West region of England.
Investment Highlights - United Utilities Group Plc – Buy at GBX 880.80
Key Risks
Update on Trading Performance (released on 24 September 2020)
One Year Share Price Chart
(Source: Refinitiv, chart created by Kalkine Group)
Valuation Methodology: Price/Cash Flow Approach (NTM) (Illustrative)
Conclusion
The Company is expecting a decline in revenue and underlying operating profit, due to the impact of covid-19 pandemic. Despite the decline, the Company is consistent with cash collection from the household customer base. UU has a strong balance sheet, gearing within the target range, a stable IFRS pension surplus and a solid A3 credit rating with Moody's. The Company continue to make an investment in the asset base and expects a small increase in the net debt. The Company provides excellent customer satisfaction in the water sector. The stock made a 52-week low and high of GBX 743.00 and GBX 1,068.50, respectively.
Based on the decent prospects and support from the valuation as done using the above method, we have given a “BUY” recommendation for United Utilities Group Plc at the current market price of GBX 880.80 (as on 7 October 2020, before the market close at 8:00 AM GMT+1), with lower double-digit upside potential based on 8.60x Price/NTM Cash Flow (approx.) on FY21E cash flow per share (approx.).
Severn Trent Plc
Severn Trent Plc (LON: SVT) is amongst the 10 largest water and sewerage regulated companies in England and Wales.
Investment Highlights - Severn Trent Plc – Buy at GBX 2,477.75
Key Risks
Update on Trading Performance (released on 15 July 2020)
One Year Share Price Chart
(Source: Refinitiv, chart created by Kalkine Group)
Valuation Methodology: Price/Cash Flow Approach (NTM) (Illustrative)
Conclusion
The Company stayed confident of a net positive outcome on Customer ODIs (Outcome Delivery Incentives) and made a strong start to the year 2020. Also, the Company has good financial resilience to manage the impact of the COVID-19 outbreak. SVT has a proven track record of paying consistent dividends. The Company has been encouraged by cash collections broadly in line with the corresponding period a year ago. The stock made a 52-week low and high of GBX 1,994.50 and GBX 2,716.00, respectively.
Based on the decent prospects and support from the valuation as done using the above method, we have given a “BUY” recommendation for Severn Trent Plc at the current price of GBX 2,477.75 (as on 7 October 2020, before the market close at 8:00 AM GMT+1), with lower double-digit upside potential based on 10.60x Price/NTM Cash Flow (approx.) on FY21E cash flow per share (approx.).
*Dividend Yield may vary as per the stock price movement.
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.
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