Donbasenergo improves 9M17 P&L

Power generation company Donbasenergo (DOEN UK) reported a 24% yoy increase in net revenue to UAH 2.99 bln in 9M17. The growth occurred despite the company’s electricity output from its single power plant falling 39% yoy (to 1.18 TWh). It also lost another power plant in March 2017, which is located on the occupied territory of Donbas. The company’s EBITDA improved to UAH 1.11 bln in 9M17 from negative UAH 0.18 bln a year before. Its net loss decreased to UAH 4 mln from UAH 338 mln a year before.

Alexander Paraschiy: While Donbasenergo was able to significantly boost its power generation in 3Q17 (it produced 3x more electricity than in 1H17), its well-being depends solely on an investment markup to its electricity rates. This, as well as the company’s 100% dependence on imported anthracite coal, makes its future hard to forecast. We continue to consider DOEN stock to be a highly risky investment.