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Concorde Capital47 page report
published May 28, 2008
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Concorde Capital
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 24-30% 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.
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| Source: | Concorde Consulting
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| Document ID: | cc48
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| Country: | Ukraine
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| Free Sample: |
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| Format: | | PDF |  |
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Concorde Capital is a full service investment and consulting company, with offices in Ukraine and Russia and operations throughout CIS financial markets. Concorde Capital's information products include daily news & research reports (equity, fixed income, industry/market, macro and strategy), covering all sectors of the economy.
