Underlying net profit in FY20 beat UBS estimates. The broker estimates the current pandemic relief package reduces FY21 revenue by around -1.5%.
However, the bigger issue arises from the recent rule change proposed by the regulator to extend retailer payment terms to networks to six months, from 10 days.
This could strain FY21 working capital if applied in Victoria. With credit metrics under pressure until capital is raised, UBS downgrades to Neutral from Buy. Target is raised to $1.90 from $1.85.
Sector: Utilities.
Target price is $1.90.Current Price is $1.94. Difference: ($0.04) – (brackets indicate current price is over target). If AST meets the UBS target it will return approximately -2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
