2025-05-21-Jefferies-Severn_Trent（SVT）_与SVT首席执行官_首席财务官卖方午餐会反馈_7页_105kb

Summary of Feedback From Sell-Side Lunch With SVT CEO/CFO

Core Content

The document provides a summary of feedback from a sell-side lunch with the CEO and CFO of Severn Trent (SVT LN). The management expressed confidence in the company's long-term growth prospects, emphasizing its differentiated equity story and multi-decade growth outlook. Key secular trends driving continued investment in the water sector include:

• Material investments in water resources
• Infrastructure resiliency against flooding
• Reduction of combined sewer spills
• Population growth

These factors are expected to support the company's financial performance and strategic initiatives over the long term.

Main Viewpoints

Financial Guidance and EPS Growth

• The management is confident in their guidance to double EPS by FY27/28, starting from a base of 112p.
• The main sensitivity for this guidance is inflation assumptions, but they appear to have been conservative in their outlook.

Outperformance Drivers

• ODIs (Other Dividend Income) are expected to outperform, with an estimated £25m post-tax in FY26 and £250m (or £300m in nominal prices) over AMP8 (Asset Management Plan 8).
• Leakage and pollution are highlighted as key drivers for this outperformance.

Investment Recommendation

• The current rating for SVT LN is HOLD.
• The price target is 2,610.00p, representing a -6% discount from the current price of 2,775.00p.
• The 52-week high-low range is 2,807p - 2,310p.
• The float is 103.0%, with advances of 2,521.05 MM (USD).

Valuation Methodology

• The price target is derived using a SOTP (Sum of the Parts) approach.
• The valuation considers multiple factors including market risk, growth rate, revenue streams, DCF, EBITDA, EPS, cash flow, and EV/EBITDA.

Key Information

• Company Description: Severn Trent Plc is a UK-based company that supplies water, waste, and utility services.
• Analysts: The report was authored by Ahmed Farman, Zach Ho, Alejandra Botbol, and Arturo Murua, all of whom are non-US registered analysts at Jefferies.
• Rating Explanation:
  • Buy: Expected total return of 20% or more over 12 months.
  • Hold: Expected total return of plus or minus 20% over 12 months.
  • Underperform: Expected total return of minus 20% or less over 12 months.
• Risks:
  • Outperformance of the water business
  • Bond yields
  • M&A activity in the sector
  • Currency risk, especially for investors in non-US currencies.

Disclosure Highlights

• Conflicts of Interest: Jefferies may have a conflict of interest due to its business relationships with companies covered in the report.
• Regulatory Compliance:
  • The report is subject to various regulatory requirements in different jurisdictions.
  • It is not tailored to individual investors and should be considered only one of many factors in making investment decisions.
• Distribution Restrictions:
  • The report is intended for professional or institutional investors in most jurisdictions.
  • In Singapore, Dubai, Hong Kong, and India, it is distributed only to accredited or professional clients.
  • In the UK and EEA, it is issued for suitable professional experience individuals.
• No Fiduciary Duty: Jefferies and its affiliates do not assume a fiduciary duty in relation to the distribution of this report.

Additional Information

• The investment recommendation record shows the report was published and distributed on May 22, 2025.

• The distribution of ratings over the past 12 months includes:

  • Buy: 60.55%
  • HOLD: 35.00%
  • Underperform: 4.45%

• The report is not an offer or solicitation to buy or sell any securities.

• It includes forward-looking statements that are subject to risks and uncertainties.

• Third-party content is used and is not guaranteed for accuracy or completeness.

• No personalized or tailored advice is provided, and all information is for general circulation.

Conclusion

The management of Severn Trent has provided a positive outlook for the company's future, citing strong secular trends and confidence in their financial guidance. The report highlights the potential for EPS growth and ODI outperformance, with a HOLD rating and a price target of 2,610.00p. However, the report also includes important disclosures regarding regulatory compliance, conflicts of interest, and distribution restrictions, emphasizing the need for independent judgment by investors.