12 October 2016
Ukraine’s leading coal and power holding DTEK Energy (DTEKUA) increased its coal mining in Ukraine by 3% yoy to 20.61 mmt in 9M16, Concorde Capital calculated based on sector-wide data published by Interfax-Ukraine. DTEK’s production of anthracite coal (mined on the occupied territory of Ukraine) rose 67% yoy to 5.29 mmt, while mining of hard steam coal fell 9% yoy to 15.32 mmt in 9M16. Total official output of steam coal by all Ukrainian mines was 23.09 mmt in 9M16 (-1% yoy).
In 3Q16 alone, DTEK Energy mined 7.76 mmt of coal in Ukraine, which is 10% more yoy and 29% more qoq. In particular, its mining of hard steam coal was 5.59 mmt (flat yoy, +22% qoq) and mining of anthracitic coal was 2.17 mmt (+49% yoy, +48% qoq) in 3Q16.
Alexander Paraschiy: The recent coal statistics are broadly in line with our expectations that DTEK Energy will achieve a 5% yoy increase in mining this year. A significant rise in coal mining from 2Q16, boosted power generation (by about 30% qoq, we estimate) and about a 6% qoq better electricity price (produced from coal) will enable DTEK Energy to boost its operating profit in 3Q16. This supports our forecast for the holding’s 2016 EBITDA of about USD 475 mln, up from USD 125 in 1H16. That said, we remain neutral on DTEKUA bonds.