DTEK thermal plants boost power output m/m, get better price in July

The thermal power plants of DTEK Energy (DTEKUA)
supplied 2.83 TWh of electricity to Ukraine’s wholesale market, or 12.2% more
m/m, Interfax-Ukraine reported on Aug. 11. The increase was caused by higher
demand for electricity from households due to hot weather, as well as the
restart of operations by some fertilizer plants, which boosted industrial
demand for electricity, Interfax said, citing DTEK’s press service.

DTEK’s anthracite-burning power plants supplied 230
GWh of electricity in July, or 34% m/m growth (but a 73% yoy drop, according to
Concorde Capital estimates). Its power plants burning hard steam coal supplied
2,604 GWh of electricity, with growth of 10.6% m/m (and up 1.4% yoy, we
estimate).

The results imply that in 7M17, DTEK’s thermal power
plants supplied 4% yoy less electricity to the market, with hard-coal plants
boosting their output 10% yoy and output at anthracite plants dropping 40% yoy.

Alexander Paraschiy: The
preliminary results are in line with our expectation that DTEK Energy will
generate gross 38.0 TWh of electricity in 2017, a 7% yoy drop. The key
uncertainty remains what average price that DTEK thermal power plants will
charge for electricity in 2017. So far, the price looks better than the holding
earlier expected: based on company-wide data from the regulator, we estimate
DTEK’s July average price was no less than UAH 1440/MWh (a 2.7% m/m increase)
and the 7M17 average price was UAH 1,485/MWh (a 46% yoy surge).

We expect the annual price for DTEK thermal plants’
electricity will be about UAH 1,400/MWh in 2017 (vs. DTEK’s estimates of UAH
1,300/MWh) and we maintain our bullish view on DTEKUA bonds.