PEFINDO assign “idA-” rating to PT Pelindo Marine Service

(November 6, 2019)--PEFINDO has assigned its “idA-” rating to PT Pelindo Marine Service (PLMS). The outlook for the corporate rating is “stable”.

An obligor rated idA has a strong capacity to meet its long-term financial commitments relative to other Indonesian obligors. However, it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated obligors.

The Minus (-) sign indicates that the rating is relatively weak within the respective rating category. The rating reflects the Company’s strategic importance to its parent, PT Pelabuhan Indonesia III (Persero) or PELINDO III; its favorable business profile as it benefits from PELINDO III’s strong coverage areas; and its improved profitability margins. However, the rating is constrained by the exposure of the Company’s trade volumes to local economic trends, its exposure to macroeconomic conditions and fluctuating commodity prices, and its moderate financial flexibility.

The rating may be raised if PLMS exceeds its projected revenue growth and strengthens its profitability margins by successfully implementing its capital expenditure (capex) plans, while maintaining a conservative financial profile, with a debt to EBITDA ratio of no more than 2.0x on a sustained basis. The rating could be lowered if its debt to EBITDA ratio exceeds 3.0x on a sustained basis as a result of weaker revenue and/or profitability, or if it incurs higher debt than anticipated due to significant capex.

Established in late 2011, PLMS is a subsidiary of PELINDO III, a leading port operator with 43 ports in seven provinces in central and eastern Indonesia, including the Tanjung Perak port in Surabaya – the second largest and busiest port in the country behind Jakarta’s Tanjung Priok port. PELINDO III owned 97.9% of PLMS’s shares as of June 30, 2019, while the remainder was owned by Koperasi Pegawai PT Pelindo III. (ends)