Donbasenergo: Top Line Grows and Bottom Line Falls in 1Q08

Donbasenergo (DOEN: BUY) reported 1Q08 net revenue of USD 94.6 mln (+24.5% yoy) and net income of USD 0.45 mln (a 10.5x yoy decrease). Alexander Paraschiy: We believe the company’s poor bottom line is related to equipment failure at Slaviansk TPP in February 2008 (due to technical problems, the plant was idle for almost two weeks), which led to a rise in the company’s operating costs and under-fulfillment of its production plan. Nevertheless, we continue to view optimistically, as we expect the company to commission its efficient CFB power unit in summer 2008, improving its operating performance and financial results.