PEFINDO: PT AKR Corporindo Tbk rated “idAA-” with stable outlook

(March 8, 2021)--PEFINDO has affirmed its “idAA-” ratings for PT AKR Corporindo Tbk (AKRA) and its Shelf-Registered Bond I Year 2017. The outlook for the corporate rating is “stable”.

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, strong financial profile, and relatively steady demand for fuel. The rating is constrained by exposure to the downturn in the mining sector and risks related to further industrial estate development.

The rating may be raised if AKRA improves its capital structure, as indicated by a debt to EBITDA ratio of less than 2.0x on a sustained basis, while maintaining efficient cost management in its fuel distribution business and achieving its industrial estate land sales target.

The rating will be lowered if AKRA aggressively finances its expansion with debt that is substantially larger than projected, which could weaken its capital structure and cash flow protection measures, without being compensated by stronger business performance, and if its profitability margin weakened significantly resulting in lower cash flow generated.

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, 2020, its shareholders were PT Arthakencana Rayatama (59.60%), management (0.66%), treasury stocks (1.68%), and the public (38.06%, each below 5% ownership). (ends)