DTEK Energy coal mining falls 2.5% m/m in April

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA)
mined 2.00 mmt of hard coal in April 2018, or 66.8 kt per day, Concorde Capital
calculated based on sector-wide data provided by Interfax-Ukraine. This is 5.0%
more yoy but 2.5% less m/m on a daily average basis. The biggest m/m decline
(28% on a daily average basis) occurred at the holding’s Dobropillia mine.

In 4M18, DTEK Energy mined 7.76 mmt of hard coal,
which is 0.3% less yoy. Ukraine’s total mining of hard steam coal increased
2.6% yoy to 9.08 mmt in 4M18.

Alexander Paraschiy: To meet its earlier announced guidance of 24.6 mmt coal mining in
2018, DTEK Energy should produce in the next eight months 68.7 kt of coal
daily, or roughly 6% more than in 4M18. This looks not likely, but still
possible. We expect the holding’s annual coal mining may reach 24.0 mmt in
2018, or roughly 4.5% more yoy. We retain our neutral view on DTEKUA Eurobonds,
reminding our clients that the risk of the holding’s liquidity falling will
rise as soon as its parent holding, SCM, has to repay over USD 800 mln as part of a UK
court ruling in
favor of Raga’s claim for Ukrtelecom.