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1. Company Snapshot

1.a. Company Description

Elia Group SA/NV operates a transmission system operator for the electricity network in Belgium and internationally.It provides electricity transmission services; transmits electricity from generators; imports and exports electricity; and offers consultancy and engineering services.The company primarily serves electricity generators, distribution system operators, and industrial consumers.


It operates 18,990 kilometers of high-voltage connections.Elia Group SA/NV is headquartered in Brussels, Belgium.

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1.b. Last Insights on ELI

Elia Group SA/NV faced negative drivers, including a lull in market headlines and underwhelming share price performance. The company's steady financial updates failed to spark significant market movement. With no major news events, investors are reassessing the company's valuation. A recent note from analysts at Kepler Cheuvreux reaffirmed their "Buy" rating . Additionally, the company did not announce any significant acquisitions or divestitures, new products, or legal issues that could impact its performance. Its recent earnings release showed stable results .

1.c. Company Highlights

2. Elia Group Delivers Strong 2024 Financial Results Amid Energy Transition Challenges

Elia Group reported robust financial performance in 2024, with adjusted net profit rising by 24.6% to €512 million, driven by increased investments in renewable energy infrastructure. Revenues reached €4.1 billion, reflecting the company's continued focus on expanding its grid capabilities in Belgium and Germany. Earnings per share (EPS) stood at €4.73, up significantly from the prior year, while the regulated asset base (RAB) grew by 28% to €18.5 billion, underscoring Elia's commitment to aligning with the EU's energy transition goals. Despite challenges such as rising costs and geopolitical tensions, Elia's financial results demonstrate its ability to deliver strong returns while navigating a complex energy landscape. The company's 2025 financial outlook remains positive, with a projected 20% annual RAB growth until 2028, supported by a €26.8 billion investment plan.

Publication Date: Mar -14

📋 Highlights
  • Significant Financial Performance in 2024: - Elia Group reported a 24.6% increase in adjusted net profit to €512 million, with revenues reaching €4.1 billion, driven by investments in Belgium and Germany.
  • Large-Scale Capital Raising: - The company announced a €2.2 billion equity package, including a €850 million private placement and a €1.35 billion rights issue, supported by major investors such as Publi-T, Atlas Infrastructure, BlackRock, and CPP Investments.
  • Strategic Investments in Renewable Energy: - Elia is focusing on renewable energy projects, including the Princess Elisabeth Island and offshore wind farms in Belgium, as well as investments in the U.S., such as Clean Path NY and SOO Green, to support the energy transition.
  • Challenges and Delays: - Despite strong financial results, Elia faced challenges such as rising costs, geopolitical tensions, and supply chain delays, leading to the postponement of some projects, including the HVDC contracts for the Princess Elisabeth Island.
  • Future Growth and Funding Strategy: - The company has a 5-year Capital Expenditure (CapEx) plan of €31.6 billion, with 60% of the budget already committed. Elia plans to leverage green bonds, hybrid funding, and potential infrastructure funds to support its expansion and maintain a balanced capital structure.

Strategic Investments and Project Developments

Elia's funding strategy has been a key driver of its growth, with the company raising €2.2 billion through a mix of private placements and rights issues, supported by major investors such as Publi-T, Atlas Infrastructure, BlackRock, and CPP Investments. Catherine Vandenborre, Elia's Chief Financial Officer, emphasized the company's ability to maintain a balanced capital structure, with a gearing ratio target of 40-60%, while exploring hybrid funding and asset rotations to support its ambitious investment plans. The company's strong financial position, as evidenced by its stable credit ratings and robust capital structure, provides a solid foundation for future projects. Elia also highlighted its commitment to maintaining a stable dividend policy, with plans to distribute €2.05 per share, excluding new shares issued in recent capital increases.

Valuation Metrics and Market Sentiment

Analysts estimate that Elia Group's revenues will grow by 18.9% in 2025, reflecting confidence in the company's ability to deliver on its strategic priorities. However, challenges such as rising costs, supply chain disruptions, and regulatory uncertainties remain key risks. Elia's ability to maintain its financial discipline while addressing these challenges will be critical to sustaining its strong performance in the coming years. As the energy transition continues to shape the sector, Elia Group's strategic investments and balanced funding approach position it as a leader in Europe's evolving energy landscape.

3. NewsRoom

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Assessing Elia Group (ENXTBR:ELI) Valuation During a Lull in Market Headlines

Sep -09

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Elia Group to raise €850m equity package for infrastructure investments

Mar -10

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Elia Group SA/NV (WBO:ELIA) Full Year 2024 Earnings Call Highlights: Strong Growth Amidst Challenges

Mar -08

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EIB commits $703m for Princess Elisabeth Island energy project in Belgium

Oct -28

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BofA Securities initiates Elia Group at 'underperform', citing growth uncertainty

Oct -14

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NKT gains 545km high-voltage cables order from Belgian TSO ETB

Sep -02

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Elia Group SA/NV's Dividend Analysis

May -30

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.65%)

6. Segments

50 Hertz Transmission

Expected Growth: 10%

Elia Group's 50 Hertz Transmission growth is driven by increasing demand for renewable energy, grid expansion, and electrification of transportation. Strong government support for energy transition, rising electricity consumption, and strategic investments in grid infrastructure also contribute to this growth.

Elia Transmission

Expected Growth: 12%

Elia Transmission's 12% growth is driven by increasing electricity demand, grid expansion, and renewable energy integration. Strong government support for energy transition and electrification of transportation also contribute to growth. Additionally, Elia's strategic investments in grid modernization and digitalization enhance its operational efficiency, further boosting growth.

Non-regulated Activities and Nemo Link

Expected Growth: 9%

Elia Group SA/NV's Non-regulated Activities and Nemo Link exhibit 9% growth driven by increasing demand for cross-border energy trading, expansion of renewable energy sources, and investments in grid infrastructure. Additionally, the integration of Nemo Link, a subsea interconnector, enhances Elia's position in the European energy market, fostering growth through increased transmission capacity and reduced energy costs.

Consolidation Entries & Intersegment Transactions

Expected Growth: 8%

Elia Group SA/NV's 8% growth is driven by strategic consolidation entries, enhancing operational efficiency and reducing costs. Intersegment transactions optimize resource allocation, fostering a competitive edge. Key drivers include increased transmission volumes, effective cost management, and successful integration of acquired assets, resulting in improved profitability and sustainable growth.

7. Detailed Products

Transmission Services

Elia Group SA/NV provides transmission services, enabling the transportation of electricity from power plants to the grid, ensuring a reliable and efficient supply of electricity to meet the demands of consumers.

System Services

Elia Group SA/NV offers system services, including frequency control, voltage control, and grid stability, to ensure the stability and reliability of the grid.

Grid Access

Elia Group SA/NV provides grid access services, enabling producers and consumers to connect to the grid, and facilitating the exchange of electricity between them.

Grid Management

Elia Group SA/NV offers grid management services, including grid planning, operation, and maintenance, to ensure the reliability and efficiency of the grid.

Data and Analytics

Elia Group SA/NV provides data and analytics services, offering insights and data-driven solutions to support the operation and management of the grid.

8. Elia Group SA/NV's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Elia Group SA/NV is moderate, as there are alternative energy providers and infrastructure operators in the market.

Bargaining Power Of Customers

The bargaining power of customers is low, as Elia Group SA/NV is a dominant player in the Belgian energy market and has a strong customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate, as Elia Group SA/NV relies on a diverse range of suppliers for its energy transmission and distribution activities.

Threat Of New Entrants

The threat of new entrants is low, as the energy transmission and distribution market in Belgium is heavily regulated and requires significant investment and expertise.

Intensity Of Rivalry

The intensity of rivalry is high, as Elia Group SA/NV operates in a competitive market with other energy providers and infrastructure operators.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.71%
Debt Cost 3.95%
Equity Weight 30.29%
Equity Cost 6.59%
WACC 4.75%
Leverage 230.20%

11. Quality Control: Elia Group SA/NV passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

102.0$

Current Price

102$

Potential

-0.00%

Expected Cash-Flows