Аннотация

Содержание отчёта

• 1. Investment Case
  Investors eye energy appreciation prize
  EV/Capacity - oriented
  Valuation revision

  2. 52 weeks: +200%
  Excess demand pulled prices up
  Praying for liquidity
  Market can't hardly wait for future improvements
  A new discount equilibrium?
  Early spring thaw melted traditional discount to OGKs
  Why the discount holds
  1. Need for reform
  Russia: Urgent problem
  Ukraine: At least a 3-year lag
  2. Stock promotion
  Russia: RAO UES and OGKs see benefits from stock appreciation
  Ukraine: Poor corporate governance and lack of independence
  3. Privatization
  Russia: Clear privatization schedule
  Ukraine: Only count on small stakes to be privatized
  Exports promise further discount reductions
  1. Larger capacity utilization
  2. Export reform: Profitability booster?
  The more progress in exports, the lower the discount to OGKs

  3. Solving the multiples valuation puzzle
  EV/EBITDA: Not very telling
  Case study: Margins decreased in 2006
  Probably undervalued by EV/S
  EV/Capacity: Definitely undervalued

  4. DCF: Grounded solutions
  DCF model passes quality control checks
  Conclusions:
  Base-case scenario: Downside as expected
  Best-case scenario: Outlining the ceiling

  5. Valuation summary

  6. Company profiles

  6.1 Centrenergo
  INVESTMENT CASE
  SHARE PRICE PERFORMANCE - chart
  BUSINESS OVERVIEW
  MARKET INFORMATION - table
  STOCK OWNERSHIP - table
  MARKET MULTIPLES - table
  KEY RATIOS - table
  Electricity Production - chart

  6.2 Dniproenergo
  INVESTMENT CASE
  SHARE PRICE PERFORMANCE - chart
  BUSINESS OVERVIEW
  MARKET INFORMATION - table
  STOCK OWNERSHIP - table
  MARKET MULTIPLES - table
  KEY RATIOS - table
  Electricity Production - chart

  6.3 Donbassenergo
  INVESTMENT CASE
  SHARE PRICE PERFORMANCE - chart
  BUSINESS OVERVIEW
  MARKET INFORMATION - table
  STOCK OWNERSHIP - table
  MARKET MULTIPLES - table
  KEY RATIOS - table
  Electricity Production - chart

  6.4 Zakhidenergo
  INVESTMENT CASE
  SHARE PRICE PERFORMANCE - chart
  BUSINESS OVERVIEW
  MARKET INFORMATION - table
  STOCK OWNERSHIP - table
  MARKET MULTIPLES - table
  KEY RATIOS - table
  Electricity Production - chart

• 7. Appendices

  Appendix 1: Peer comparison
  Output and financials

  Appendix 2: Key drivers for export growth
  Lack of capacity in Russia
  Growing demand in the west
  UCTE integration

  Appendix 3: Gas-fueled capacity - If it's not loaded, it doesn't count

  8. Analyst Certification

  
  CHARTS

  Market
  Relative performance
  GenCos vs. OGKs indices
  Trading history, Monthly data
  Monthly free float turnover, Shares
  Stock indices (MCap-weighted)
  GenCos discount to OGKs by EV/Capacity
  Pure generation companies: EV/EBITDA 2007E
  Pure generation companies: EBITDA margins 2006
  EV/Sales 2007E
  EV/Sales vs. EBITDA margins, 2007E
  EV/Capacity, USD/kW
  EV/Utilized Capacity 2006, USD/kW
  EV/Capacity vs EBITDA(07E)/Capacity
  Model revision summary: base-case scenario - CEEN
  Model revision summary: base-case scenario - DNEN
  Model revision summary: base-case scenario - DOEN
  Model revision summary: base-case scenario - ZAEN
  Model assumptions that justify current GenCo prices
  Russian regions with an energy-deficit last winter
  Summary map: potential export winners

  
  TABLES

  Target price revision, USD
  Capacity and output
  Financial summary, USD mln
  Market ratios (07E)
  Shareholders
  Valuation summary, USD
  2007 Multiples: GenCos
  OGKs
  Capacity utilization rates of power producers
  Average wholesale tariffs, USD/MWh
  EBITDA margins
  Valuation by EBITDA/Capacity (benchmarking to lower 95% regression interval)
  Key assumptions
  DCF vs. the market, USD
  DCF valuation at the best-case scenario
  Valuation summary, USD
  Implied 12M upside summary
  Centrenergo - Income Statement Summary
  Centrenergo - Balance Sheet Summary
  Centrenergo - Quarterly Analysis
  Centrenergo - Base-case DCF model output
  Centrenergo - Sensitivity analysis
  Dniproenergo - Income Statement Summary
  Dniproenergo - Balance Sheet Summary
  Dniproenergo - Quarterly Analysis
  Dniproenergo - Base-case DCF model output
  Dniproenergo - Sensivity analysis
  Donbassenergo - Income Statement Summary
  Donbassenergo - Balance Sheet Summary
  Donbassenergo - Quarterly Analysis
  Donbassenergo - Base-case DCF model output
  Donbassenergo - Sensivity analysis
  Zakhidenergo - Income Statement Summary
  Zakhidenergo - Balance Sheet Summary
  Zakhidenergo - Quarterly Analysis
  Zakhidenergo - Base-case DCF model output
  Zakhidenergo - Sensivity analysis
  Per MWh financial ranking (2006E, USD)
  Utilization rates of installed generation capacity
  Market multiples, 2007E
  EV/Capacity, USD/kW