bell potter feedback - positive with $1.55 pt

1H Result
􀂄􀀃 1H result: revenues inline, good cost control
SKI reported a good set of H1 numbers, with regulated revenue (+4% vs pcp) offsetting declines in semi/non-regulated revenue (-7% vs pcp). EBITDA was ahead of our expectations and an (in our view) impressive +10% vs pcp at ETSA, driven largely by cost reductions in the unregulated business and a weather-related increase in higher margin residential sales.
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􀂄􀀃 Regulatory review also a key driver
The final determination of the Victorian regulatory review is due at the end of October this year. The regulators draft determination was for capex of ~30% less than SKIs proposal and there is the possibility that SKI could appeal the final decision. The 1H dividend of 6.72cps was ahead of our expectation, but we continue to forecast a dividend cut (FY11e 10dps) as capex ramps up.
􀂄􀀃 Buy rating and $1.55 price target maintained
Our DCF derived SoTP valuation for SKI has increased slightly from $1.55 to $1.58 as we allow for some margin improvement. We maintain our $1.55 price target pending the strategic and regulatory reviews.