Decarbonisation fuelling growth
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Edison Investment Research Limited
London, UK, 18 April 2024
Edison issues outlook on Jersey Electricity (JEL): Decarbonisation fuelling growth Jersey Electricity (JEL) is intensifying its focus on energy security and electrification across Jersey by creating opportunities to accelerate growth. It successfully navigated the volatile wholesale power price environment in 2020–23, shielding its customer base from the worst inflationary pressures. However, from 2025, as older, more favourable hedges expire, this protection will diminish. Therefore, we have marginally reduced our earnings forecasts to account for the increased exposure to wholesale prices. Nonetheless, JEL remains well-positioned for continued growth, driven by decarbonisation and electrification over the long term. Since our last report, we have trimmed our earnings forecasts for FY24 by approximately 12% to better reflect the increased volatility and higher long-term wholesale power prices that JEL faces as its older price hedges begin to expire. We have made some adjustments to longer-term earnings to reflect forward power markets, although these remain volatile. These changes reduced our discounted cash flow (DCF) and sum-of-the-parts (SOTP) valuation slightly from 722p to 683p, although this is still well above JEL’s current share price of 440p. The company also offers an attractive 4.7% dividend yield and maintains a strong net cash balance sheet. At an FY24e P/E of 15.2x, JEL’s relative valuation remains modest versus its peers at 15.3x. Click here to view the full report. All reports published by Edison are available to download free of charge from its website About Edison: As a content-led investor-relations business, Edison helps companies stand out and meet the right shareholders. Edison’s integrated investor relations solution combines expert analyst content, digital targeting and active investor engagement. This drives liquidity and valuations by building bigger, better informed and more engaged investor audiences globally. Edison has a proven history of increasing liquidity and valuations for its clients. Edison’s content can be viewed by all investors, anywhere in the world. Edison is authorised and regulated by the Financial Conduct Authority. 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 Edison: Andrew Keen +44 (0)20 3077 5700 industrials@edisongroup.com Harry Kilby +44 (0)20 3077 5724 industrials@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn https://www.linkedin.com/company/edison-group-/ X www.twitter.com/Edison_Inv_Res YouTube http://www.youtube.com/edisonitv
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1883981 18-Apr-2024
