DTEK Energy boosts coal mining 2.7% in 2M19

Ukraine’s leading coal and power producer DTEK Energy
(DTEKUA) produced 3.74 mmt of raw coal in 2M19, Concorde Capital calculated
based on sector-wide data reported by the Energy Ministry last week. This is
2.7% more yoy, but 8.3% below the ministry’s plan. In February alone, the
holding mined 1.84 mmt of coal, which is 2.0% less yoy but 7.3% more than
January, on an average daily basis.

Total mining of raw steam coal in Ukraine amounted to
4.23 mmt in 2M18, or 0.9% less yoy. In this way, DTEK Energy’s share in
Ukraine’s steam coal mining reached 88% in 2M19, up from 85% a year ago.

Alexander Paraschiy: DTEK’s 2M
data is in line with our expectation that the holding will boost its 2019
production by 1-2% yoy. Such a result should be just enough to secure the
holding’s self-sufficiency in hard steam coal amid an expected increase of
coal-fired power generation by 3-4% yoy and higher consumption of hard steam
coal by power plants, as an alternative to imported anthracite coal. We
maintain our neutral view on DTEKUA Eurobonds, keeping in mind that the holding
is most sensitive to politics (i.e. elections) in Ukraine’s fixed income
universe.