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Analysis before buying or selling Terna shares

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If the Terna - Rete Elettrica Nazionale share can be traded easily from your bank or a trading platform, speculating on the price of this stock requires a good knowledge of this value and therefore of this company. To help you do this, we will explain in this article the strengths and weaknesses of this group, the areas in which it operates, its main partners and its European competitors.

Elements to consider before selling or buying Terna shares

Analysis N°1

Of course, the international expansion of the Terna - Rete Elettrica Nazionale group is one of its major challenges. It is therefore necessary to follow closely the operations carried out by this group in order to develop in certain countries and in particular outside Europe, such as certain countries in Asia, Africa or other regions of the world.

Analysis N°2

Any investments in the creation or acquisition of energy production units are also very important to consider, as this would make Terna a company with greater strength in this area and above all a company with better vertical integration.

Analysis N°3

Of course, the level of demand for electricity, mainly from Italy but also from Europe, will be a very interesting indicator for trading on this share price, as it will determine the level of services provided by Terna in the future.

Analysis N°4

The evolution of the price of electricity will also have to be monitored, since a drop in this energy can have a negative impact on Terna - Rete Elettrica Nazionale's profit margins and therefore weigh on its overall results.

Analysis N°5

More generally, the economic health of Europe and the economic situation in Italy will also affect the level of electricity consumption and therefore the demand for transmission of this electricity, but also the state budgets dedicated to the construction and expansion of transmission networks.

Analysis N°6

Finally, the last element to be analysed in order to anticipate future variations in this asset concerns government policies in Italy and other European countries, which may sometimes represent a brake on Terna's activities and their development.

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General presentation of Terna

First, let's take a moment to understand the main activities of the Italian group Terna - Rete Elettrica Nazionale. It is important to analyze the main business sector and the related areas in which Terna operates.

First of all, it should be remembered that the Terna - Rete Elettrica Nazionale group is a company specialising in the operation and maintenance of the major part of the Italian high and very high voltage electricity network. However, we can go further in this analysis by dividing Terna's activities into several categories according to the share of turnover generated and in this way:

  • The operation of the Italian electricity network accounts for approximately 82.6% of the company's total turnover. Currently, the Terna Rete Elettrica Nazionale Group operates a network of 72,881 km of power lines, 6,253 bays and 871 transformers.
  • The remaining 17.4% of Terna's turnover comes from maintenance services for high-voltage lines owned by the Enel group and its subsidiary Enel Distribuzione, and for the fibre-optic network of Enel.net, another Enel subsidiary. Terna - Rete Elettrica Nazionale also provides engineering services for power plants and telecommunications operators.
Analysis before buying or selling Terna shares
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The major competitors of Terna

To be able to carry out good analyses of the Terna share price, it is necessary to know perfectly the sector of activity in which it exerts but also and especially its principal competitors. We therefore propose a quick presentation of the biggest players in this sector:

Red Electricade Esapnaor REE

This Spanish company specialises in the energy sector and is the operator of the high-voltage electricity transmission network in Spain. The company is also listed on the stock exchange and is part of the Ibex 35 stock market index. It is in charge of an electrical transmission network in Spain as well as the autonomous electrical systems of the Spanish islands, with more than 44,000 km of high voltage lines and a transformation capacity of 92,000 MVA.

Elia

This manager of the high-voltage transmission network of 30,000 to 380,000 volts in Belgium manages the transmission of electricity from producers to the distribution network managers who then supply SMEs and private individuals. Elia also has contracts with several large industrial users directly connected to the high voltage network.

State Grid Corporation of China

Finally, this Chinese company is the largest grid operator, transporter and distributor of electricity in the world in terms of the number of employees, with more than 1,564,000 people. It is in charge of electricity transmission through subsidiaries located in all the provinces of North, East and Central China, i.e. 26 provinces representing 88% of the Chinese territory. It is also currently the third largest company in the world in terms of number of employees, behind Walmart and China National Petroleum Corporation.


The major partners of Terna

Let's move on to another interesting aspect of the Terna - Rete Elettrica Nazionale group's situation, this time concerning the partnerships and strategic alliances that the group has set up in the past and that have had an influence on its stock price. The following examples should help you to anticipate future movements of this stock during similar events.

GDF SUEZ

In 2008, Terna entered into a strategic partnership with the French group GDF SUEZ, now Engie. This partnership provided for equal participation of the two groups in the first two power plants of the GEK Terna group, Heron I and Heron II. These are two natural gas-fired power plants with environmentally friendly technology and high efficiency thanks to modern equipment that are being built in Viotia, Greece. They are the first private power plants in Greece.

Alstom 

In 2011, it is another French company, namely Alstom and its subsidiary Alstom Grid, which enters into a strategic partnership with Terna - rete Elettrica Nazionale in the context of Alstom's supply to Terna of the Smart Dispatch Market Management solution. This application, launched in January 2011, has been configured according to the new rules of the Italian electricity market. It is a solution based on a very flexible system that allows Terna to adapt quickly and comply with changes in local electricity regulations. It includes state-of-the-art technology and applications for Smart Grids to optimize the management of large electricity networks while bringing the benefits of energy market efficiency to end customers.

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Positive factors for Terna shares
The factors in favour of a rise in the Terna share price:

To have the best chance of understanding how the Terna - Rete Elettrica Nazionale share price is likely to perform in the coming years, it is necessary to take a close look at the strengths and weaknesses of this group, in other words, its ability to stay in the market or to expand its business. We propose here to help you in this complex undertaking by revealing the main strengths of this group and therefore the assets of this stock.

  • First of all, the sheer size of the company is undoubtedly one of its main assets in the market. Terna - Rete Elettrica Nazionale employs more than 3,500 people, mainly in Italy, which demonstrates its size in this sector. But Terna's position in the European electricity transmission market is also a strength of the group. It is the leading transmission network operator in Europe and one of the most powerful companies in the world in this field. Today, the group has 22 connection lines to foreign countries and manages more than 63,500 km of transmission lines. Of course, it is also Terna that is exclusively in charge of the Italian electricity network.
  • The fact that the Terna - Rete Elettrica Nazionale group is part of the Italian FTSE MIB stock index makes it an interesting stock for traders.
  • Another strength of the Terna Group - Rete Elettrica Nazionale - is its high reputation and very positive brand image. Terna has been voted the best electricity supplier in Europe. This, of course, helps to reassure stock market investors and shareholders of this company.
Negative factors for Terna shares
The factors in favour of a drop in the Terna share price:

We have just seen together that the Terna Rete Elettrica group has many strengths, you should not neglect the other elements that can influence, this time negatively, this stock. Also, as part of your analysis of this asset, you will also take into account the weaknesses of this stock with the main arguments that could affect the value of this stock, leading to a downward trend or a slowdown in the upward trend. Here are the most unfavorable elements that can be observed at the moment for Terna.

  • First of all, although the group has succeeded in positioning itself as the only player in its sector of activity in Italy and as the leader in this field in Europe, its capacity for international development and expansion remains relatively limited. In fact, Terna's activities are still very much concentrated on the European sector and its international market share is not very interesting. Of course, this remains dangerous for this group, which is thus highly exposed to geo-economic risks and to a possible European sectoral crisis. Moreover, most of Terna's activities are carried out in Italy and not in the rest of Europe, which further increases the risk incurred.
  • Another major disadvantage of the Terna - Rete Elettrica Nazionale group is that it does not have a fully owned energy production unit. As a result, it is not really present in the whole value chain. This is a real disadvantage for Terna compared to its competitors, who often run such units. It also creates a significant dependence on the companies that produce the electricity, with Terna ultimately acting only as a provider and intermediary for the delivery of the electricity or having to rely on joint ventures to hold shares in certain production units.

As you can see, the Terna Group currently has only two major drawbacks. However, these drawbacks should be considered carefully because they can have a significant influence on the stock market price. You should therefore consider their weight more than their number.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.
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