UU's recent ESG presentation highlighted how AMP7 delivery drives preparation for AMP8, the need for resilience investment and a net zero by 2030 commitment. Consequently, we are cognisant of the potential upside to our c.£1bn (2017/18 prices) assumed annual totex allowance in AMP8 (& beyond) as a consequence of net zero, resource, biodiversity, and sustainability needs. PR24 is just around the corner, and we would not be surprised to see the industry seek totex levels above those we currently factor in. A housekeeping exercise on our estimates sees our FY22E operating profit estimate nudge up further (Figure 7), with UU flagging higher revenues in its recent trading statement, albeit partly offset by inflationary pressure on opex. Higher inflation also impacts the cost of index-linked debt, reducing our EPS estimate slightly for FY22E. There is negligible change to our estimates in the outer years. Our target price increases marginally to 1,265p (vs. 1,260p), with the regulated activities valued at a 31% premium to FY22E RCV (Figure 9). Our target price includes c.100p for the pension surplus on an IFRS basis, which even if disregarded still points to c.18% upside from current levels. UU remains our preferred water stock and we reiterate our Buy recommendation. UU is set to publish its 1H22 results on 24th November, and we set out our expectations in Figure 8. We look for an increase in underlying operating profit of c.2% reflecting the revenue increase flagged in the trading statement, partly offset by the aforementioned inflationary pressure on costs.