UU provided concise 1H20 guidance in its 25th September trading update, pointing to higher underlying operating profit, a loss at the JV line, higher financial expenses, and debt up by c.£250m vs. FY19 levels. Our £386m estimate for underlying operating profit (+4.9% vs. 1H19), underlying EPS of 29.37p (+1.6%), and net debt of £7.3bn reflect these trends. Our 14.16p estimate for the interim DPS reflects UU’s dividend policy of at least RPI growth. The upcoming PR19 final determination on 16th December is arguably the most important issue facing UU, and it is unclear what the company can or is willing to say ahead of the announcement. That said, we expect that management will highlight the ability to outperform on finance costs, the relatively small difference between Ofwat’s summer 2019 view of AMP7 capex vs. UU’s business plan, the benefits of UU’s approach to systems thinking, and the relative strength of the pension position vs. the peer group. A view on possible ODI performance in AMP7 might not be forthcoming. A webcast presentation will be held at 9am the same day, and slides will be available from that time (link). We model a 5% nominal WACC in our AMP7 estimates, vs. Ofwat’s 5.14% in July’s draft determinations; on our estimates, UU is currently trading at a 6% premium to FY21E RCV, vs. an 11% premium in our valuation. We see upside in the stock which should be released by the clarity that we expect to ensue following the election and final determination. Buy.