SKI – UBS rates the stock as Neutral

The Australian Energy Regulator has determined its final proposal for the SA Power Networks. This confirms revenue will reduce -5.5% over 2020-25 relative to the prior period, mostly because of lower allowed rates of return. The outcome is better than expected.

UBS revises forecasts, noting that while TransGrid growth is a net positive in the long run, it will also reduce Spark Infrastructure’s distributions over FY20-23. Target is raised to $2.10 from $2.05. Neutral maintained.

Sector: Utilities.

Target price is $2.10.Current Price is $2.12. Difference: ($0.02) – (brackets indicate current price is over target). If SKI meets the UBS target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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