Report
Wim Lewi

Elia Group Stop the value destruction, time to reconsider

Elia is caught is a vicious value destruction circle and should reconsider its strategy. The company has aligned its Capex with the grid development plans that are in turn based on valid net-zero ambitions. These are no longer supported by the populist political environment (despite Valencia/LA fires). Our assumptions were relatively conservative as we assumed Elia could raise capital at around EUR 100 per share. In June 2022, a rights issue raised 590m at 124.5 per share. The market is now signalling that it is not willing to support anywhere near that valuation. At less than half the previous valuation, the dilution forces us to reconsider our price target to EUR 85 (from 124). However, we maintain an Accumulate rating (was BUY) as there is a 36% upside from the current level.
Underlying
Elia Group SA/NV

Elia System Operator develops, operates and maintains very-high-voltage (380 kV, 220 kV and 150 kV) and high-voltage (70 kV, 36 kV and 30 kV) networks, providing its customers with consultancy and engineering services. Whether in Belgium, Germany or elsewhere in Europe or the U.S., Co. ensures that electricity flows reliably from energy producers to distributors and large corporate customers. Co.'s main activities include transmission operator, system operator and market facilitator, developing and maintaining grid infrastructure, connecting electrical installations to grids, providing transparent access to grids, while taking initiatives to improve electricity market operations.

Provider
KBC Securities
KBC Securities

We are a financial services provider for several types of professional clients, each with distinct needs.

 

Analysts
Wim Lewi

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