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Coal Energy mining plunges 47% yoy in February

Coal Energy mining plunges 47% yoy in February

18 March 2013

Coal Energy (CLE PW) reported a 47% yoy plunge in coal mining to 71 kt in February, while saleable coal production from waste processing dropped 43% yoy to 10 kt. Coal waste reprocessing grew 18% mom in February following the ongoing ramp up of its beneficiation facility. In its comments, the company stated that output declined following lower sales opportunities. Lower sales volumes (though not lower than 80 kt) may persist during the next couple of months, according to the company. Its production plans remain unchanged: 2.9 mmt of coal in FY2014, 3.4 mmt in FY2015, and 3.8 mmt in FY2016, the company reiterated.

Roman Topolyuk: Based on the company’s guidance, we are reducing our mining forecast to 1.3 mmt in FY2013 (-18% yoy), and to 192 kt (-27%) for coal production from waste. Hence, Coal Energy is trading at a 2013E forward multiple of 3.6x EV/EBITDA, we estimate, still way below 5-7x for its international peers. With decreasing electricity production in Ukraine (-6.9% in 2M13), and continuing oversupply on the domestic market, Coal Energy would need a large overseas contract to significantly improve its sales dynamics.

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