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Ukrainian Thermal Energy Generation / Электрогенерация в Украине

Автор: Конкорд Консалтинг - 28.05.2008 - 47 стр.
ID (номер): 2639
Версия для печати


Дата выхода:28.05.2008
Количество страниц:47
Язык отчета:Английский
Способ предоставления:В электронном виде
Цена:3 750 грн.
Оплата:безналичные
Доставка:бесплатно, e-mail



The five publicly traded thermal power generation companies account for 1/3 of electricity production in Ukraine. Thermal generation will carry all the country’s power demand growth: the only alternative, nuclear power plants, are close to full capacity load.

The profitability of Ukrainian thermal power generation is one of the lowest in the world, but we expect improvement with demand for thermal electricity increasing in the next couple of years. Five listed generators are controlled by state - privatization, expected in 2009-2010, would be a catalyst for the stocks.

We see three main drivers in the wings that are poised to push GenCos' EBITDA up by more than tenfold in the next decade: privatization (most probable in 2010), a sharp rise in demand for thermal electricity (after 2010) and wholesale electricity market liberalization (2010-1012). We forecast EBITDA margins will start accelerating in 2011 and approach xx% by 2016.

To widen the set of tools to value Thermal power generation stocks, we employ DCF modeling, valuation by comparable deals in Russia and an asset-based approach. With inherent drawbacks in each of the methods, we do not rely on a single approach.

Электрогенерация в Украине

5 публично торгуемых теплоэнергетических компаний производят третью часть всего электричества в Украине. Тепловая генерация будет вынуждена покрыть весь рост потребления электроэнергии, ожидаемый в будущем, так как атомные электростанции уже близки к пику своих мощностей.

Прибыльность украинских электрогенерирующих компаний является одной из самых низких в мире, но мы ожидаем улучшение ситуации в связи с повышением спроса на электроэнергию в ближайшие несколько лет. 5 названных производителей подконтрольны государству – приватизация, ожидаемая в 2009-2010, станет катализатором роста акций компаний.

Мы видим три главных рычага, способных увеличить EBITDA компаний в более чем в десять раз в следующем десятилетии: приватизация (наиболее вероятна в 2010), резкое увеличение спроса на электроэнергию (после 2010) и либеризация оптового рынка электроэнергии  (2010-2012). Согласно нашим прогнозам, EBITDA начнет расти в 2011 и достигнет 24-30% к 2016.

При оценке справедливой стоимости компаний, мы применяем модель дисконтирования денежных потоков (DCF), сравнение с аналогами по финансовым коэффициентам, и оценку стоимости активов. Поскольку каждый из подходов содержит свои подводные камни, мы не делаем преференций одному методу, а полагаемся на средний показатель.

TABLE OF CONTENTS

1. Investment thesis
Investment summary
Closing in on mid to long-term value drivers
Alternative investment to Russian OGKs
Gas-fired power units idled again
Privatization in 2008 is highly unlikely
We recommend BUY on all GenCo stocks
Our top picks
GenCos summary - table

2. Stock market
GenCos: short-term OGK leapfrogs
Russian market restructuring takes wind out of OGKs
Daily multiples relationship: GenCos vs OGKs - chart
Breaking the psychological threshold
EV/Capacity, USD/kW - chart         
GenCos’ premium/discount to OGKs  - chart
Stock market monitor
Centerenergo. Stock performance, Spread, %, Trading volumes, USD mln – chart
Dniproenergo Stock performance, Spread, %, Trading volumes, USD mln – chart
Donbasenergo Stock performance, Spread, %, Trading volumes, USD mln – chart
Zakhidenergo Stock performance, Spread, %, Trading volumes, USD mln – chart

3. L-T outlook: Energy balance is beneficial for TPPs
Supply: no alternative to TPPs after 2010
Tariffs and capacity load, December 2007 – chart
Forecast of available nuclear capacity, GW - chart
Capacity and load forecasts by type of producer - chart
CapEx needed to up production
NERC initiative
GenCo CapEx roundup: Only Vostokenergo has a clear plan
Case study: Modernization at Vostokenergo
Production forecasts
Capacity load factor by GenCos - chart
Energy deficit + Market reform = long-term surge in bottom line
Wholesale market liberalization schedule approved by Cabinet
Aggregate EBITDA of four GenCos - chart

4. S-T outlook: Over-regulation will persist
Production: return to market rules
DNEN and CEEN grew faster in 2007
Electricity market 2007: production total, production by coal-fired units, capacity load factor, 2007 - table
Electricity market 1Q08: production total, production by coal-fired units, capacity load factor, 2007 - table
Gas-fired power units will be mothballed
DOEN and ZAEN will outrun the pack in 2008
Gas and energy coal prices in Ukraine - chart  
Fuel costs of power units, USD/MWh - chart
Production forecasts, Centreenergo, Dniproenergo, Donbasenergo, Zahidenergo, Kyivenergo, Vostokenergo, 2008 - table

5. Financials: costs will boost… profits
2007: Growth in top line, minor changes in bottom line
Financial results of GenCos, 2007 - table
1Q08: Top line is booming, profitability falling
Financial results of GenCos, 1Q08 - table
Time series analysis: profitability is steadily decreasing
Yoy changes in aggregate costs and tariffs - chart
Aggregate EBITDA margin - chart

6. Corporate events
2008 privatization is hardly possible
Conflict between President and Prime Minister
Distribution of privatization proceeds: the key sticking point
2010 looks more realistic
Dniproenergo: DTEK seems to have lost its chance

7. Valuation

7.1 Valuation methods
Peer valuation underestimates GenCos' value
Valuation by modeling GenCos’ operations is subject to uncertainties
Asset base can be a good approximation of long-term value potential

7.2 Peer valuation
Market multiples
Peer valuation summary, Developed market peers - table
Peer valuation summary, Emerging market peers - table
Peer valuation summary, Russian peers - table
Relationship between EBITDA/Capacity and EV/Capacity - chart
Regression-implied GenCo prices  - table
Comparable deals: Russian OGKs
OGK privatization multiples - table
Implied upsides by OGK deals - table

7.3 DCF valuation
Operating model assumptions
Average tariff, USD/MWh - chart
Average capacity load (coal units) - chart
Net revenue, USD mln - chart
Coal (USD/mt) and gas prices - chart
Fuel efficiency - chart
Fuel costs, USD/MWh  - chart
Gross margins - chart
DCF valuation summary
Implied 12M prices - table

7.4 Asset base valuation
Replacement value (RV) of fixed assets
Russian coal-fired power unit construction pipeline - table
Depreciated RV
Fixed asset accounting on GenCos’ balance sheet - table
Estimation of net asset base, USD mln - table

7.5 Valuation summary
Valuation summary, Centrenergo, USD - chart
Valuation summary, Dniproenergo, USD - chart
Valuation summary, Donbasenergo, USD - chart
Valuation summary, Zakhidenergo, USD - chart

8. Company profiles

8.1 Centrenergo
BUSINESS OVERVIEW
INVESTMENT CASE
SHARE PRICE PERFORMANCE - chart
MARKET INFORMATION - table
STOCK OWNERSHIP - table
MARKET MULTIPLES - table
KEY RATIOS - table
Power plants location (circles for CEEN) - chart
Financial summary and forecast, USD mln: 2005 - 2016E
DCF output, 2008E - 2016E, UAH mln
Sensitivity, USD per share

8.2 Dniproenergo
BUSINESS OVERVIEW
INVESTMENT CASE
SHARE PRICE PERFORMANCE - chart
MARKET INFORMATION - table
STOCK OWNERSHIP - table
MARKET MULTIPLES - table
KEY RATIOS - table
Power plants location (circles for CEEN) - chart
Financial summary and forecast, USD mln: 2005 - 2016E
DCF output, 2008E - 2016E, UAH mln
Sensitivity, USD per share

8.3 Donbasenergo
BUSINESS OVERVIEW
INVESTMENT CASE
SHARE PRICE PERFORMANCE - chart
MARKET INFORMATION - table
STOCK OWNERSHIP - table
MARKET MULTIPLES - table
KEY RATIOS - table
Power plants location (circles for CEEN) - chart
Financial summary and forecast, USD mln: 2005 - 2016E
DCF output, 2008E - 2016E, UAH mln
Sensitivity, USD per share

8.4 Zakhidenergo
BUSINESS OVERVIEW
INVESTMENT CASE
SHARE PRICE PERFORMANCE - chart
MARKET INFORMATION - table
STOCK OWNERSHIP - table
MARKET MULTIPLES - table
KEY RATIOS - table
Power plants location (circles for CEEN) - chart
Financial summary and forecast, USD mln: 2005 - 2016E
DCF output, 2008E - 2016E, UAH mln
Sensitivity, USD per share

9. Appendices

Appendix 1: Power demand drivers: consumption, grid losses & exports
Decrease in grid losses limited demand growth
Structure of total demand, TWh - chart                                   
Electricity losses in grids, % of input - chart
Growth rates: Production vs consumption - chart
Internal consumption: key demand driver
Structure of internal consumption, TWh - chart
Structure of Ukrainian exports, TWh - chart
Export: less to the east
Export to UCTE
Export to CIS               

Appendix 2: Why have OGK prices dropped?
YTD performance, May 26, 2008 - table
Overoptimism
OGKs' market EV/Capacity vs. EV/Capacity of acquisition deals - chart
Anticipated market overhang
Case study: RAO UES restructuring

10. Analyst certification
11. GenCos target history

 





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