Sadovaya ups coal sales 18% yoy, mining 65% yoy in 11M11

Sadovaya Group (SGR PW) increased coal sales 17.5% yoy to 1.14 mmt in 11M11, according to a production update yesterday. Coal output rose 65% yoy over the period to 0.418 mmt, virtually in-line with preliminary data disclosed by the Energy Ministry. Coal recovered from waste dumps grew 367% yoy to 0.05 mmt. Alexander Paraschiy: With 11M results in hand, we see the company will outperform its coal sales guidance for the year (1.21 mmt) by about 5%, and most likely outperform even more in terms of revenue. It is also clear now Sadovaya will not reach its EBITDA and net income targets for 2011, mainly due to lower than expected share of internally produced (more profitable) coal in its sales. With the company now catching up on delays in commissioning new longwalls and having secured financing for its main short-term profit driver – the waste enrichment facilities – we expect Sadovaya to sharply increase both the share of its own coal traded and profitability next year.