PEFINDO assigns “idA” rating to PT Wijaya Karya Beton Tbk

(March 26, 2021)--PEFINDO has assigned its “idA” rating to PT Wijaya Karya Beton Tbk (WTON). 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 that of other Indonesian obligors.

However, the obligor is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated obligors.

The corporate rating reflects our view on WTON’s position as a strategically important subsidiary of its controlling shareholder, PT Wijaya Karya (Persero) Tbk (WIKA, idA/Stable), strong market position as one of the largest precast concrete manufacturers, and its extensive network with diversified services and products. However, the rating is constrained by its moderate financial profile, sensitivity to changes in macroeconomic conditions, and threat of new entrants.

The rating may be raised if WTON strengthens its market position and significantly improves its financial profile on a sustained basis. On the other hand, the rating may be lowered if WTON’s revenue and/or EBITDA significantly falls short of its targets, which will affect its cash flow, and if its new debt exceeded projections without a corresponding revenue increase, worsening its financial profile on a sustained basis. The rating will also be under pressure if we view that WTON is no longer considered as a strategically important subsidiary to WIKA which may be indicated by significant decline in WIKA’s ownership and control over the Company.

WTON is one the largest precast concrete manufacturer in Indonesia. As of December 31, 2020, WIKA was its majority shareholder with 60.0% ownership, followed by Koperasi Karya Mitra Satya (KKMS, 5.9%), Yayasan Wijaya Karya (1.0%), key management (0.9%), and the public (32.3%). (ends)