The Australian Energy Regulator has released its draft guidelines while the ACCC has also released its electricity report. The AER draft is a worst-case scenario, in Macquarie’s opinion, while the ACCC recommendations have a mixture of positives and negatives.
Macquarie lowers the target to $2.51 from $2.64 to reflect the draft AER decision. Upside remains centred on the transmission investment in NSW and organic population growth in Victoria. Neutral rating maintained.
Target price is $2.51.Current Price is $2.21. Difference: $0.30 – (brackets indicate current price is over target). If SKI meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).