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DTEK power generation rises 0.7%, power price up 1.5x in 5M17

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA) generated 15.2 TWh of electricity in 5M16 (a 0.7% yoy increase), Concorde Capital calculated based on the sectorwide data of Energobiznes. Generation by its thermal power plants (TPPs) burning hard coal rose 11% yoy to 10.4 TWh, while TPPs burning anthracite decreased their output 27% yoy to 2.9 TWh.

In May alone, DTEK Energy generated 2.28 TWh of electricity, which is a 14% decline yoy (and 12% decline m/m). TPPs burning hard coal boosted their generation 8% yoy to 1.94 TWh (-8% m/m), while production by anthracite-burning TPPs shrunk 76% yoy to 0.20 TWh (-28% m/m) as two of three DTEK’s TPPs of that type stayed idle.

Alexander Paraschiy: The monthly result is in line with our expectations, and in June we expect about a 20% m/m increase in power production by DTEK’s hard-coal-fired TPPs. For the full year, we anticipate DTEK will produce about 38 TWh of electricity (-7% yoy).

The average electricity prices of DTEK’s TPPs (which are the holding's only profit-generating units) look advantageous so far: in 5M17, the rate was UAH 1,510/MWh, which is 49% higher yoy. We estimate such a price should allow DTEK to generate about UAH 10.7 bln in EBITDA in 1H17, which would be 3.3x more yoy.

In the second half of the year, we expect DTEK’s achieved electricity prices and EBITDA may decline. Nevertheless, we remain bullish on DTEK Energy’s Eurobonds.

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