The draft decision on the South Australian Power Networks has confirmed Morgans’ view that distribution revenue will fall. A lower capital expenditure budget also means a slowdown in regulated asset base growth.
The regulator has provided for a revenue allowance across 2020-21 to 2024-25 of $3.9bn, resulting in a -$90m decline in distribution revenue in 2020-21.
Morgans maintains a Reduce rating and lowers the target to $1.96 from $2.06.
Target price is $1.96.Current Price is $2.12. Difference: ($0.16) – (brack
ets indicate current price is over target). If SKI meets the Morgans target it will return approximately -8% (excluding dividends, fees and charges – negative figures indicate an expected loss).