PEFINDO raises rating of AKR

(March 10, 2023)--PEFINDO has raised the rating of PT AKR Corporindo Tbk (AKRA) and its Shelf Registered Bond I to idAA from previously idAA-. Following the rating upgrade, we have revised the corporate rating outlook to “stable” from previously “positive”. The rating upgrade reflects AKRA’s continuous financial improvement, stemming from solid EBITDA as demand for fuels and basic chemicals will remain bold in the near to medium term. Furthermore, the rapid revenue growth from the industrial estate business will provide a good cushion for AKRA's business and finances by generating recurring income that may partially compensate for the revenue volatility from the distribution segment.

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

The rating may be raised if AKRA substantially strengthens its business profile by increasing its recurring income and expanding the market share in its core businesses, trading and distribution segment while maintaining a conservative capital structure and strong cash flow protection measures. We may lower the rating if the Company’s revenue and/or EBITDA fall significantly short of the targets and /or if it incurs more debt than projected without being compensated by higher EBITDA, which will aggravate its 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, 2022, its shareholders consisted of PT Arthakencana Rayatama (59.60%), management (1.45%), the public (37.27%, each below 5% ownership), and treasury stocks (1.68%). (ends)