PT Kawasan Industri Jababeka Tbk.

The stable outlook reflects our expectation that PT Kawasan Industri Jababeka Tbk. (Jababeka) will maintain its EBITDA interest coverage at 1.5x-1.6x over the next 12 months despite a weaker operating performance. We also anticipate that the company will maintain sufficient liquidity, given our view of continued recurring income from its infrastructure operations and modest capital expenditure. We may lower the rating if Jababeka's revenues from property sales and power plant dwindle, such that its EBITDA interest coverage declines materially below 1.5x over the next 12 months. We estimate this would happen if the company's EBITDA declines below Indonesian rupiah (IDR) 700 billion. Continued weakness in the Indonesian rupiah would also put pressure on Jababeka's debt servicing capability because the company's

...Rating buffer is narrowing due to soft operating performance.Jababeka's leverage is likely to maintain elevated because we believe the company will prioritize expansionary capital expenditure over debt repayment. We expect Jababeka's EBITDA interest coverage to decrease to 1.5x-1.6x in the coming two years, compared with 1.8x at the end of 2017. This compares with our downgrade trigger of less than 1.5x. The company has sufficient liquidity for the next 12 months. It has long-dated debt and limited short-term debt maturities. Jababeka also has the flexibility to scale down spending on land acquisitions if it faces cash stress. Jababeka will remain exposed to Indonesia's muted property market. We expect the company's property sales to be lackluster over the next 12 months as a result of dull nationwide property sales. Jababeka's property business is likely to contribute 60%-65% of total EBITDA over the next 12-24 months....

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