Pefindo: PT Wijaya Karya (Persero) Tbk rated “idA” with stable outlook

(October 1, 2020)--PEFINDO has assigned its “idA” ratings for PT Wijaya Karya (Persero) Tbk (WIKA). 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 Plus (+) sign indicates that the rating is relatively strong within the respective rating category.

The corporate rating reflects WIKA’s strong market position in the national construction industry, diversified revenue sources, and strong financial flexibility. The rating is constrained by high financial leverage in the near to medium term, risks from expansion into new businesses, and relatively volatile business environment.

The rating may be raised if WIKA significantly strengthens its market position in the domestic construction industry, reflected by achieving its targeted revenue and EBITDA on a sustained basis, while demonstrating more steady cash flow generation supported by more diversified business. The rating may be lowered if it incurs significantly higher debt than projected without a corresponding increase in EBITDA on a sustained basis.

Established in 1961, WIKA is one of the largest construction state-owned enterprises (SOE) in Indonesia. It is expanding its business into property, realty, investment, energy, precast and construction engineering. As an SOE construction company, WIKA has high participation in strategic government projects, such as high-speed railway project. As of June 30, 2020, its shareholders were the Indonesia government (65.05%) and the public (34.95%). (ends)