AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
• Water companies' shares have come under pressure after Britain's regulator opened an enforcement case against the South West Water.
• Investigation on water companies has intensified in past years.
Britain's water regulatory authority Ofwat has come down hard on water companies following violations of rules involving its wastewater treatment works. Due to this, the shares of water companies came under pressure. Pennon Group Plc (LON:PNN) shares significantly fell 6% on Tuesday.
A year ago, Ofwat and the Environment Agency launched an investigation after several water companies admitted to flouting sewage disposal rules.
©2022 Kalkine Media®
Pennon Group Plc is accused of making sewage discharges into rivers and other water bodies by paying their executives hefty bonuses and increasing customers' bills.
In March, the watchdog launched probes against several water services companies, including the likes of Wessex Water, Thames Water, Northumbrian Water, Anglian Water, and Yorkshire Water.
Expressing his shock, Ofwat CEO David Black said that the involved companies must aim to resolve any problems with wastewater treatment. Since last year, these investigations have further escalated after the government's U-turn, which has set a limit to the amount of wastewater a company can release.
A quick look at 3 FTSE-listed water services companies that investors may watch closely before investing.
Severn Trent Plc (LON: SVT)
The FTSE 100-listed water supply company, Severn Trent Plc, provides clean water and wastewater services through two business entities -- Business Services and Regulated Water and Wastewater.
Last year, the company's chief executive was paid around £4 million as it hiked customer bills by 7.1%. It was also fined £1.5 million for discharging 80,000 gallons of waste into Worcestershire watercourses. With a market cap of £6,886.50 million as of 29 June 2022, the share of the water supplier was trading at GBX 2,781.00, up by 1.42% at 14:18 (GMT+1).
The company's share value has appreciated in the last year by 10.48%, while its Year-to-Date return stands at -5.33%, as of 29 June 2022.
United Utilities Group Plc (LON: UU.)
The UK-based FTSE 100-listed water and wastewater company market cap stands at £6,992.77 million as of 29 June 2022. With Earnings Per Share (EPS) of -0.08, the share of the water supplier was trading at GBX 1,043.00, up by 1.71% at 14:52 (GMT+1) on Wednesday.
The company's share value has appreciated in the last year by 4.65%, while its YTD return saw a decline by -4.13%, as of 29 June.
Pennon Group Plc (LON: PNN)
The FTSE 250-listed UK-based water utility company has three principal subsidiaries, Bristol Water Group, South West Water Limited and Pennon Water Services Limited. With a market cap of £2,634.60 million as of 29 June 2022, the share of the water utility company was trading at GBX 1,003.00, down by 0.40% at 15:03 (GMT+1). The Pennon Group investors have suffered as its share value has depreciated over the last year by -12.57%, and its YTD returns to struggling at -13.88% as of 29 June 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.