London, UK, 14 March 2019

Edison issues outlook on Jersey Electricity (JEL)

Jersey Electricity's (JEL) strong financial position and forecast cash flow should underpin 5% per year growth in the dividend per share. Although JEL faces wholesale cost rises, lower unit demand and a fluid regulatory situation, we believe that, given its strong position on pricing and service standards, it is well positioned to withstand these pressures. Our latest valuation analysis indicates increased upside potential from current levels.

Our updated valuation (the average of peer group multiples, using cover-adjusted yield/DCF/SOTP), indicates a valuation of c 560p (+2.5%) versus 546p last year. In particular, the increased SOTP valuation (from 552p to 592p) has been driven by a growth in regulatory assets and reduced debt. Despite a recent rise in the share price following the better than expected FY18 results released in December 2018, the shares offer 20% upside to the average of our valuation, with the prospect of growing income from the dividend.

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