LW Bogdanka: Getting past the hard times
We reiterate our BUY rating for Bogdanka despite trimming our FV to PLN 64.19 (from PLN 66.29). We believe that the majority of problems with output have been resolved and from 2019 on coal production should come in at around 9.4Mt, i.e. 0.4Mt higher yoy. We also believe that the startlingly high cost growth in 2018 should be over as the preparation of new tunnels (galleries) reached plateau at nearly 38km, setting the average industry standard at 4km/1Mt of planned coal production. Henceforth, for 2019 we assume a total cost increase of 7% or 150Mt (vs 11% PLN 217m in 2018), which predominantly stems from the electricity price increase and salaries hike. Regarding realized coal prices we expect that the renegotiation of the contract with parent Enea will enable a 15% price increase on average in 2019 following which we expect 2% yoy growth for the rest of the forecast period in line with cost inflation. On our numbers, LWB trades at a low 19E/20E EV/EBITDA of 2.5/2.2x, at a ca. 55%/60% discount to international coal peers which we find unwarranted.Lubelski Wegiel Bogdanka is a hard coal manufacturing group based in Poland. Co.'s core business activities are mining and agglomeration of hard coal. The energetic coal sold by Co. is used mainly for the generation of electric and thermal energy as well as for cement production. Co.'s customers are mainly the industrial companies, first of all those acting in the power industry and situated in east and northern - east Poland. Co.'s mine is located in the part of Lubelskie Coal Basin (LZW) and performs its mining operations within the mining area with surface of 57 km2.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.