Coal Energy decreases coal mining 4.5% mom in November

Coal Energy (CLE PW) decreased coal mining 4.5% mom in November to 149.0 kt, while in 5MFY13 coal extraction volumes came in 20% higher yoy at 778 kt. Coal recovery from waste grew 2.7x mom to 7.8 kt in November, and rose 54% yoy to 134 kt in 5MFY13.

Roman Topolyuk: Coal Energy underperformed Ukraine’s coal sector, which experienced a 2% mom decline in extraction volumes in November in both of CLE’s subsegments – coking coal (-15.3% mom) and thermal coal (-2.5%). With such slowing of mining volumes, the company may fall short of meeting its recent target of 2.2 mmt in FY2013 by 8%, we estimate. Therefore, we project the company’s EBITDA in FY2013 to decline 3% yoy to USD 59.8 mln (down from USD 64 mln, assuming 2.2 mmt of total annual coal mining). The company trades at attractive 3.1x EV/EBITDA 2013E (vs. the global median of 7.4x), while we argue that a better entry point for the long position might appear. Key risks stem from a possible hryvnia devaluation, as well as from a price decline for coking and thermal coal in Ukraine.