DTEK coal mining reaches latest record in September

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) produced 17.71 mmt of hard steam coal in 9M18, or 4.6% more yoy on a
like-to-like basis, according to its Oct. 11 press
release. Its biggest mining asset, Pavlohrad Coal, produced 14.83 mmt of coal
in 9M18, or 1.1% more yoy.

This implies that in September alone, DTEK Energy
produced about 2.17 mmt of hard steam coal, or 22% more yoy. On a daily average
basis, the figure is 72.4 kt, which is 3.0% more compared to August and a new
record high.

In 2018, DTEK Energy will produce 24.3 mmt of coal,
the company’s release stated. This would be a 6.0% increase yoy on a
like-to-like basis.

Alexander Paraschiy: To reach its announced annual production target, DTEK Energy should be
producing 71.6 kt of coal daily in the remaining months. This looks realistic
based on its September result. That said, we see DTEK’s 2018 coal mining at
24.1-24.3 mmt, which is above our previous estimate of 23.4-23.6 mmt, but below
DTEK Energy’s initial plan of 24.6 mmt. Such a level should be enough for the
holding to fully cover its needs in hard steam coal for the nearest heating
season. All in all, we retain our neutral view on DTEKUA Eurobonds.