DTEK Energy coal mining up 6%, power production down 7% in 10M18

The coal mines of DTEK Energy (DTEKUA) produced 19.92
mmt of raw coal in 10M18, Concorde Capital calculated based on sector-wide data
provided by the Energy Ministry. This is 5.9% more yoy (on a like-to-like
basis) but 2.2% below plan. In October alone, the mines produced 2.20 mmt of
coal, which is 17.9% more yoy but 1.7% less compared to September in average
daily terms.

DTEK Energy’s power plants generated 30.37 TWh of
electricity in 10M18, which is 6.6% less yoy (on a like-to-like basis). Its
power units burning hard steam coal boosted power generation 0.9% yoy (to 24.82
TWh), while power units burning anthracite generated 36% less yoy. In October
alone, DTEK’s power plants generated 2.86 TWh of electricity, which is 25.8%
less yoy but 5.6% more than September (on a daily average basis).

Alexander Paraschiy: The holding
has consistently produced 70-72 kt of coal per day in Ukraine over the last
three months, and is likely to produce the same in the next months. That means,
DTEK Energy will have produced 24.2-24.3 mmt of coal in full year 2018, which
more or less corresponds to the holding’s updated plan of 24.3 mmt.

DTEK’s yoy power generation drop in October can be
attributed to problems stemming from anthracite coal supply (e.g.
anthracite-burning Kryvorizka Power Plant underperformed its monthly production
plan by 63%). It is also a result of Kyivenergo stopping its electricity
production since August. Based on the results and production outlook, we see
DTEK Energy’s power plants will produce 36.2 TWh of electricity in 2018, which
is 3% below our previous estimate and 9% less yoy. We remain neutral about DTEKUA
Eurobonds.