Ann: Spark Internalisation Explanatory Memorandum, page-6

re: Ann: Spark Internalisation Explanatory Me... Summary from Credit Suisse Equity Research (26/05/11)

Target Price (From 1.39) to 1.55
Projected Return:
Capital Gain (%) 30.3
Dividend Yield (net %) 7.9
Total Return % 38.1

Rating: Outperform

Recent regulatory appeal for ETSA = $301mn upside to revenue over 5 years

VALUATION = 1.74/share, 10% discounted DCF target = 1.55
Implied EV/EBITDA = 9.3x (2011 earnings)
= 8.3x (2012 earnings)

Fantastic turnover today for a regulated utility. A sign that market sentiment is positive for good 'old trusty infrastructure. Not a sexy choice, but a lot less risky than the other sectors...

Watch out for AER rulings for other Vic Networks (SP AusNet, Powercor, UED, Jemena), Further upside for SPN, SKI and possibly DUE is likely if favorable results come through...