DTEK power generation falls 39% yoy in August

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) produced 2.32 TWh of electricity in August, which is 24% less than in
July and 39% less yoy, Concorde Capital calculated based on sector-wide data
provided by the Energy Ministry. Its production by power units burning hard
steam coal slid 20% m/m and 30% yoy to 2.10 TWh, production by
anthracite-burning units decreased 34% m/m and 66% yoy to 0.22 TWh, while
production at gas-fired combined heat and power plants was zero.

In 8M18, DTEK Energy generated 24.89 TWh of
electricity, which is 0.8% less yoy. Its power units burning hard steam coal
boosted power generation 5% yoy to 19.77 TWh, while anthracite-burning units
reduced generation 25% yoy to 3.02 TWh and gas-fired units decreased generation
2% yoy to 2.10 TWh.

Alexander Paraschiy: The plunge
in DTEK Energy’s power generation in August was the result of its high
comparison base from last year, when the company was forced to boost its output
to compensate losses from the temporarily idled units of nuclear power
plants. Being much cheaper power generators, nuclear power plants tend to be
loaded to the maximum, while thermal power plants (including those operated by
DTEK) are loaded on the remaining principle. Low generation of nuclear power in
August 2017 led to a jump in DTEK’s share of total power generation to 32%
(compared to the annual average share of 27% in 2017) vs. the nuclear plant
share of 52%. In August 2018, nuclear power units were loaded much better and
reached a 63% share in Ukraine’s total output. Instead, DTEK’s share dropped to
20%.

In the coming months, DTEK’s electricity will be in
higher demand as seasonal demand in Ukraine rises. So we are sticking to our
forecast that the holding will boost its power generation by 2-3% yoy. We also
remain neutral on DTEKUA Eurobonds.