United Utilities: Dividend Policy Maintained Without Rights Issue, Shares Fairly Valued

Unsurprisingly, no-moat United Utilities accepted Ofwat's final determination for the AMP8 five-year regulatory period that was disclosed last December and included improvements compared with the draft determination released in July. The group announced that it will continue to grow its dividend in line with inflation during AMP8, in line with our expectations. Unlike what it previously contemplated, it will not resort to a rights issue to fund its investments and dividend, which is positive. We maintain our GBX 1,000 fair value estimate and view the shares as fairly valued.