PEFINDO: PT Elnusa Tbk raised to idAA with stable outlook

(April 13, 2023)--PEFINDO has also raised ELSA’s Shelf Registered Sukuk I Phase I Year 2020 to idAA(sy). The rating actions reflects our view on stronger degree of support from its ultimate shareholder PT Pertamina (Persero). Following the new holding structure since September 2021, Pertamina is expected to have an agile, focused organization and therefore bring more benefit and support to its subsidiaries. Elnusa is considered as a strategic subsidiary to support all activities of Pertamina’s upstream businesses under its subholding PT Pertamina Hulu Energi (PHE) that include exploration and production of oil and gas taking place across all business locations of Pertamina both domestically and abroad. In addition, Elnusa also serves activities from other subholding, namely PT Pertamina Patra Niaga, of which Elnusa was appointed as official distributor for subsidized fuel and gas for areas outside Java, Madura, and Lampung.

The rating reflects Elnusa’s strong support likelihood from Pertamina Group, strong presence and diversification in the oil and gas services business, and very strong financial profile. The rating is constrained by the exposure to oil price volatility and exposure to project risk.

The rating may be raised if Elnusa significantly strengthens its business position, validated by significant growth in revenue and earnings, while maintaining its conservative capital structure and strong cash flow protection measures on a sustained basis. However, the rating may be lowered if Elnusa aggressively finances its expansion with debt that is substantially larger than projected, which may weaken its capital structure and cash flow protection measures, without being compensated for by stronger business performance, and if we view a significant weakening support from and ownership by its Parent. The rating may also be under pressure in the event of significantly lower service fee, resulting in significantly lower revenue, cash flow, or profitability.

Established in January 1969, Elnusa is engaged in integrated upstream oil and gas services, upstream oil and gas support services, and logistics and distribution services related to the downstream oil and gas sector. As of December 31, 2022, PHE was Elnusa’s major shareholder with a 51.1% stake. The remaining shares were owned by others, including the public with ownership stakes below 5% each, with 48.9% stake. (ends)