PEFINDO: PT AKR Corporindo Tbk rated “idAA-”, outlook revised to “positive”

(March 11, 2022)--PEFINDO has affirmed its “idAA-” ratings for PT AKR Corporindo Tbk (AKRA), its Shelf-Registered Bond I Year 2017. The outlook for the corporate rating is revised to “positive” from “stable” in light of AKRA’s intensive deleveraging from the past three years, stemming from strong cash flow generation, particularly from trading and distribution, as well as industrial estate segments. We are of the view that macroeconomic improvement in the near to medium term will lead to solid demand for fuel and basic chemical distributed by AKRA, and its well-integrated industrial estate business in Java Integrated Industrial and Port Estate (JIIPE) is expected to cement its EBITDA generation by providing a high margin business and stable recurring income.

An obligor rated idAA differs from the highest rated obligors only to a small degree, and has a very strong capacity to meet its long-term financial commitments relative to that of other Indonesian obligors. The Minus (-) sign indicates that the rating is relatively weak within the respective rating category.

The rating reflects AKRA’s extensive logistics infrastructure network, continued strong financial profile, and strong demand for fuel and basic chemical. The rating is constrained by its high exposure to business volatility in the mining sector.

The rating may be raised if AKRA continue to lower its debt in conservative level, as indicated by a debt to EBITDA ratio of less than 2.0x on a sustained basis, while also maintaining strong cash flow generation, particularly from its core businesses, trading and distribution, and industrial estates. The outlook may be revised to stable if the Company fails to demonstrate debt deleveraging by incurring substantial higher-than-expected investment cost without being compensated by stronger business performance. The rating may also be under pressure if there is materialized EBITDA impairment due to lower demand, resulting in a weaker financial profile.

AKRA is engaged in the trading and distribution of fuel and basic chemicals in Indonesia. Through its subsidiaries, it is also involved in logistics, manufacturing, integrated industrial estates, and ports. As of September 30, 2021, its shareholders were PT Arthakencana Rayatama (59.60%), management (1.13%), treasury stocks (1.68%), and the public (37.59%, each below 5% ownership). (ends)