Centrica PLC (LSE:CNA)’s British Gas arm should emerge as a winner from the current UK gas crisis and with a bigger market share as weaker suppliers go under, according to Credit Suisse.
The Swiss broker estimates that as many as 4.72mln customers might be forced to switch providers due to their current supplier going out of business.
Some1.72mln people have been transferred already as the price of gas has soared, but Credit Suisse estimates 3mln more are at risk of their current provider going bust.
Centrica will pick up 200,000 of these as a supplier of last resort, CS estimates, which will take its total customer base up to 7.4mln, though in the short term there will be a cost as people move back to default tariffs.
The broker expects the new providers will be able to defer some of these expenses to avoid a massive hike in customers’ bills in 2022.
Higher oil and gas prices might also allow Centrica finally to sell its oil and gas production assets and thrash out a settlement with the pension fund, which might see the dividend restored possibly as early as 2021.
CS’s target price rises to 75p from 70p to reflect the value of more customers even if there is a short-term impact on earnings due to the transfer costs.
Shares rose 0.9% to 58.8p.