Global Cable Expansions Will Drive Grid Modernization

Key Takeaways

• Strategic expansion in high-value cable projects and facilities supports stronger margins, sustained growth, and enhanced profitability across global energy transition markets.
  
• Robust balance sheet management and geographic diversification underpin reliable cash flow, de-risk expansion, and enable higher shareholder returns.
  
• Reliance on unsustainable margins, exposure to volatile external risks, and dependency on fossil fuel projects threaten future profitability, growth, and shareholder returns.

Catalysts

Manufactures and sells aluminium, copper, cables, steel and steel pipes, and other related products in Belgium, Greece, Other European Union countries, Other European countries, the United States, and internationally.

• Ongoing global investments in grid modernization and the energy transition (especially upgrades for renewables and offshore wind) are fueling robust demand for Cenergy's high-specification cable projects, as evidenced by a record order backlog and continued strong capacity utilization-supporting multi-year revenue and EBITDA growth.
  
• Strategic capacity expansions across submarine and land cable facilities, including the upcoming Thiva and Baltimore (U.S.) plants, position Cenergy to address growing addressable markets and further benefit from long-term grid enhancement needs, which is expected to lift sales volumes and operating leverage, thereby positively impacting margins and earnings.
  
• Increasing focus on high-value, specialized products (e.g., submarine cables for offshore wind, hydrogen and CO2 transport pipes) is driving a favorable project mix and margin expansion, as seen in the 27% rise in group EBITDA on only 10% revenue growth-improving profitability and supporting future net margin improvement.
  
• The company's disciplined balance sheet, record free cash flow, and prudent working capital management are enabling continued self-funded capital investment and higher shareholder returns (e.g., increasing dividends), de-risking growth plans and providing headroom for earnings growth and payout upside.
  
• Diversification in project backlog across geographies (including North America and APAC) and sectors (interconnectors, CCS, hydrogen, offshore wind) reduces exposure to regional regulatory risks and cyclical downturns, while benefiting from broad-based infrastructure trends, supporting sustained revenue visibility and cash flow resilience.

Cenergy Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Cenergy Holdings's revenue will grow by 12.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.8% today to 9.7% in 3 years time.
• Analysts expect earnings to reach €251.0 million (and earnings per share of €1.07) by about August 2028, up from €139.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.1x on those 2028 earnings, down from 17.3x today. This future PE is lower than the current PE for the BE Electrical industry at 43.9x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.21%, as per the Simply Wall St company report.

Cenergy Holdings Future Earnings Per Share Growth

Risks

• The exceptional profitability and margins in the steel pipes division (above 16% EBITDA), achieved in 2024, are acknowledged as unsustainable in the medium to long term, likely to normalize downward, which could pressure group net margins and earnings growth.
  
• The company faces substantial external risks such as geopolitical disruption, increased protectionism (e.g., U.S. tariffs, anticipated EU safeguards), and low steel demand coupled with lower-cost competition-any of which could destabilize steel prices, reduce order volumes, and negatively impact both revenues and profitability.
  
• The steel pipes backlog remains heavily tied to natural gas and fossil fuel-related projects, which exposes Cenergy to the global secular decline in fossil fuel infrastructure investment, potentially resulting in shrinking revenue streams and order backlogs if the energy transition accelerates away from gas.
  
• Cenergy's recent cash position and deleveraging partly result from a large share capital increase rather than organic operating cash flow, which, if not matched with high future returns from capacity expansions, may dampen return on equity and dilute shareholder value, dampening earnings growth per share.
  
• Capacity expansions and investments (especially in the U.S.) require flawless execution against rising global competition, and any delays, execution missteps, or market downturns could drive underutilization, compress margins, and result in underperformance of projected revenues and EBITDA.

Valuation

• The analysts have a consensus price target of €12.662 for Cenergy Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €2.6 billion, earnings will come to €251.0 million, and it would be trading on a PE ratio of 17.1x, assuming you use a discount rate of 9.2%.
• Given the current share price of €11.36, the analyst price target of €12.66 is 10.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.