Komsomolets Donbasa reports 24% revenue growth in 1Q11

Komsomolets Donbasa (UX: SHKD UK), a coal mine with ~ 4mln mt annual extraction, reported its 1Q11 financials in a filing yesterday: revenue grew 24% y-o-y to USD 43.4 mln, EBITDA improved 33% y-o-y to USD 14.3 mln, and net income amounted to USD 0.9 mln vs. a loss of USD 0.8 mln y-o-y. The company extracted 1,080 ths mt of coal during the period, up 10.6% y-o-y. Yegor Samusenko: Though all financials improved within the period, we continue see the enterprise as a cost center within parent company DTEK’s value chain (owns 94.6% of the mine). This is reflected in the low coal selling price, which amounted to USD 40.2 for the quarter (vs. USD 35.9 in 1Q10) while domestic spot prices for energy coal varied in the range of USD 80-100 per mt depending on the quality of the coal. Given that this has been the practice for long time already and is priced in by the market (which values the stock at less than USD 3 per mt of coal reserves) and we do not see a reason for a foreseeable change, we do not expect the stock to react to the published financials.