Edison Initiates Coverage on Jersey Electricity

News provided by

Feb 09, 2015, 10:19 ET

LONDON, February 9, 2015 /PRNewswire/ --

Edison Investment Research, a leading international investment research firm, announces the initiation of full coverage of Jersey Electricity, the monopoly supplier of electricity to the island of Jersey.

The electricity business is responsible for generating over 75% of group revenues and operating profit. In addition to its core electricity assets, Jersey Electricity operates a range of other businesses including property rental, retailing and business services. Jersey Electricity's largest shareholder is the government of Jersey, with 62% of the issued share capital and 86% of the voting rights.

(Logo: http://photos.prnewswire.com/prnh/20130417/608168 )

At a share price of 374p, JEL trades at c 26% discount to the average of our valuation analysis, which indicates a share price of 504p. While some discount may be required to reflect minority shareholder status and liquidity issues, it is also possible to argue for a higher valuation for Jersey Electricity given that it is in a stronger financial position than the other regulated companies. With a net debt to RAV ratio c 13% at FY14, compared to other regulated utilities with net debt to RAV ratios of 60-65%, JEL carries substantially less debt. A net debt/asset base ratio of 65% for Jersey Electricity would imply net debt of c £100m (ie an extra c £80m). Jersey Electricity's dividend also remains well covered (2.3x in 2014) in comparison to a utility sector average of c 1.7x. Adjusting the DPS to equalise cover with the other utilities would increase our overall average valuation to 518p. Jersey Electricity also offers a yield of c 3.4%.

To download this report, please click here.

All reports published by Edison are available to download free of charge from its website www.edisongroup.com.

About Edison: Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals works with leading companies, fund managers and investment banks worldwide to support its capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584).

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information please contact:

Graeme Moyse, Edison Investment Research, +44(0)20-3077-5700

Roger Johnston, Edison Investment Research, +44(0)20-3077-5722

[email protected]

Contact details: Learn more at www.edisongroup.com and connect with Edison on:

LinkedIn www.linkedin.com/company/edison-investment-research
Twitter www.twitter.com/Edison_Inv_Res
YouTube www.youtube.com/edisonitv

SOURCE Edison Investment Research