DTEK Energy boosts revenue by 20%, EBITDA by 28% in 9M18

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) generated UAH 119.8 bln in net revenue in 9M18, or 20%
more yoy, according to its abridged non-audited report. Its operating profit
doubled yoy to UAH 9.0 bln and net profit was UAH 3.4 bln (vs. a UAH 1.0 bln
loss a year before).

The holding’s EBITDA amounted to UAH 19.0 bln in 9M18,
according to Concorde Capital’s estimates, which is 28% more yoy. Its EBITDA
margin, therefore, increased by 1pp to 15.9% in 9M18. It generated cash from
operations (before working capital changes) in the amount of UAH 19.1 bln, up
22% yoy.

DTEK Energy’s net debt shrunk 2% YTD to UAH 60.4 bln
as of end-September, and its Net Debt to LTM EBITDA ratio decreased to 2.1x
from 2.6x as of beginning of 2018.

Alexander Paraschiy: The loss of
control over heat and power plants by Kyivenergo, DTEK’s subsidiary, will
result in slowed revenue growth for DTEK Energy in 4Q18, but should further
improve its profitability. Some pressure on profits could have resulted from
the switch of DTEK’s Luhanska power plant from coal to expensive natural gas,
but this emergency situation has turned out to be short-lived
(over the last week, the plant switched fully to burning coal).

That said, we see DTEK Energy will continue to
improve its P&L and leverage indicators in the coming quarters. In our
view, the holding’s stronger P&L and balance sheet radically contrasts with
the low prices of its Eurobond, which currently offer a 11.5% yield to
maturity.