Centrica PLC (LSE:CNA) will hold an investor 'teach-in' on 10 December to try and highlight the attractions of its nascent smart metering business and some analysts expect the British Gas owner will also provide a trading update on the day.
The FTSE 100 group is expected to hike its outlook for the full year, said UBS, thanks to supportive trends in commodity prices, particularly natural gas, and the company’s improved risk management in trading operations.
The current consensus estimate is for 2024 EPS is 18.4p, according to Visible Alpha, while UBS forecasts 20p.
In a note to clients, UBS also said the metering teach-in could also assuage some investor doubts over potential investment risk.
Investments in metering represent an annual capital expenditure of £125 million and underscores Centrica's aim to achieve internal rates of return of at least 8% from the project.
UBS, which maintains a 'buy' rating with a price target of 175p, calculates that Centrica has £3.3 billion in total potential investment capacity between 2025 and 2028, based on £1.65 billion excess cash on the balance sheet and a similar amount of uncommitted capacity implied by its capital allocation framework.
Of this, £500 million is expected to fund the Meter Asset Provider (MAP) business.
With Centrica's potential equity participation in the Sizewell C nuclear project expected to see an allocation of £1.25-1.5 billion, this leave around £1.5 billion uncommitted, "which would take away a lot of perceived investment risk," UBS said.