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which won’t have a headache to find demand for Dobropillia’s coal, as the holding does not need this coal internally. The merger also looks to benefit the government, enabling it to take control over an efficient coal mine.
On the flipside, it's the government that will get a headache as steam coal produced by all the other state-run mines will find no demand in the mid-term. The annual coal needs of Centrenergo – 4.2-5.0 mmt in the last two years, and likely to be around 4.0 mmt this year and on – can be satisfied solely by Dobropillia. Therefore, all the other state-controlled steam coal mines are going to be closed soon.
Net revenue at power generation company Centrenergo improved 56% y/y to UAH5.68bn in 3Q20​, according to its abridged financials published on October 16. Its EBITDA in the quarter turned to positive UAH0.40bn (from negative UAH0.29bn a quarter ago and negative UAH0.26bn a year ago) and its bottom line improved to positive UAH0.33bn (from negative UAH0.29bn a quarter ago and negative UAH0.33bn a year ago).​ ​In 9M20, Centrenergo’s revenue increased 27% y/y to UAH14.93bn, EBITDA was marginally positive at UAH0.04bn (vs. negative UAH1.44bn a year before) and its bottom line remained negative at UAH0.16bn (improvement from UAH1.49bn in losses in 9M19).​ ​The reason for the company’s improvement in P&L in 3Q20 is not clear, taking into account that Centrenergo’s power generation was about 40% lower y/y and the average electricity price on the wholesale market was 19% weaker y/y in the quarter. Therefore, the only explanation for its improved top line is the company’s heavy involvement in electricity trading operations, so we are looking forward to see more detailed reports from the company. Thus far, it is impossible to derive any conclusions about the sustainability of Centrenergo’s accounts from the latest report.
9.1.10 ​Renewables corporate news
Ukraine’s leading producer of green electricity DTEK Renewables reported a 98% y/y increase in revenue to UAH4.10bn in 1H20​, according to its October 28 filing. Its EBITDA reached UAH3.54bn, or 113% more y/y, according to Concorde Capital calculations. At the same time, its 1H20 bottom line plunged 70% y/y to UAH0.44bn, which was largely the result of UAH1.73bn in exchange losses and UAH0.35bn in receivables impairment.​ ​In €terms, DTEK Renewables’ revenue improved 111% y/y (to €143.5mn) and EBITDA advanced 127% y/y (to €123.8mn) in 1H20, according to our estimates.​ ​The company’s operating cash flow before working capital changes rose 108% y/y to UAH3.59bn, while accumulation of receivables amounted to UAH2.07bn in 1H20 (or 50% of its 1H20 revenue). This was the result of poor payment discipline of the state-run buyer of electricity. With such a working capital build up, DTEK Renewables generated just UAH0.98bn in net cash from operations in 1H20 (down 33% y/y).​ ​The company’s total debt and net debt increased 5% YTD as of end-June 2020, to UAH22.7bn and UAH18.2bn, respectively. Its gross lending to related parties stood nearly flat YTD at UAH6.4bn.
9.2.11 ​Metallurgy & mining corporate news
China’s Sinosteel started work in the first week of October on a 3-year, $250mn project to build a new metal pelletizing plant at ArcelorMittal Kryvyi Rih​, Ukraine’s largest integrated steel company. The plant is part of
68​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com