DTEK Energy power generation falls 16% in 4M19

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) generated 11.77 TWh of electricity in 4M19, Concorde Capital
calculated based on information provided by Energobiznes. This is a 16.0% yoy
decline and a 5.9% yoy decline on a like-to-like basis (excluding data from
Kyiv-based heat and power plants that DTEK has not operated since August 2018).
Its coal-fired thermal power plants cut their power generation 5.8% yoy to
11.61 TWh, of which power units fueled by scarce anthracite coal reduced their
generation 24.3% yoy to 1.39 TWh. Power units burning hard steam coal decreased
their generation 2.5% yoy to 10.22 TWh in 4M19.

Total power generation in Ukraine slid 1.7% yoy to
53.83 TWh in 4M19, with DTEK Energy’s share of the total was 22% (down from 26%
a year before).

Alexander Paraschiy: DTEK’s power
generation was more or less in line with the Energy Ministry’s plan for 4M19.
That plan foresaw a decline in power production by all Ukrainian thermal power
plants by about 2.5% yoy in 2019, so we expect DTEK Energy will have a
comparable decline this year (down 2-3% yoy on like-to-like basis, implying
total decline of 7-8% yoy).

At the same time, we remain bullish on DTEKUA
Eurobonds, keeping in mind that DTEK has the potential to have its credit
rating upgraded soon. We also stress the possible improvement in DTEK Energy’s
fundamentals in 2H19 due to the recent liberalization of the Ukrainian
electricity market.