CEEN, DOEN, ZAEN join in sector-wide margins improvement in 1H11

Another three GenCos reported financials since market close yesterday: Centrenergo (UX: CEEN UK), Donbasenergo (UX: DOEN UK), Zakhidenergo (UX: ZAEN UK) (see table below).

 GenCo 1H11 financial results summary
USD mln     CEEN   DNEN   DOEN   ZAEN
Revenue      393.9  519.1  221.3  454.1
y-o-y          16%    56%    28%    66%
EBITDA        35.0   79.7    8.8   45.4
Margin          9%    15%     4%    10%
y-o-y           4 pp   2 pp   4 pp   9 pp
Net Income   17.3   41.7    0.2   34.0
margin          4%     8%     0%     7%
Source: State Securities & Exchange Commission

Yegor Samusenko: Reflecting the hike in the electricity selling price for all GenCos in 2Q11, sector margins improved significantly, reaching 4%-15% in 1H11 from -8%-9% in 1Q11. Though we deem this electricity price hike rather short-term (as in 2Q10) and see whole-year figures being more moderate, we note that margins being posted are 2 pp-9 pp above those earned in 1H10, reflecting that the entire sector’s profitability improved. Among the GenCos, we note Zakhidenergo reported an unexpectedly strong EBITDA margin of 10%, which put the company in second place in terms of profitability in the sector. We expect a positive market reaction in the liquid names, Centrenergo and Donbasenergo.