PT Kawasan Industri Jababeka Tbk.

The stable outlook reflects our expectation that Jababeka will maintain its ratio of liquidity sources to liquidity uses of over 1x in the next 12 months. This can be achieved by balancing the weakened sales prospects with stringent working capital management, reduced discretionary capital spending, and controlling shareholder distributions. We could lower the rating if: Jababeka's operating conditions continue to weaken, leading to further deterioration of liquidity or cash burn that is faster than we expect. An indication of that could be liquidity sources declining materially below 1.0x of uses, or cash balance falling to a level below the company's annual interest costs. The ongoing lawsuit and shareholder tussle affect the company's management, operations, or sales performance in a way

...We estimate PT Kawasan Industri Jababeka Tbk.'s (Jababeka) EBITDA interest coverage will decline to 1.2x-1.4x in 2021, from about 1.6x in 2020, as a result of the significant slowdown in EBITDA generation in 2021. The company's EBITDA in 2021 is likely to weaken because the COVID-19 outbreak in Indonesia, which has severely affected the company's 2020 sales, will likely linger for the rest of the year. We expect marketing sales in 2020 to decline 60%-63% from 2019, reaching Indonesian rupiah (IDR) 650 billion-IDR700 billion. This stems from a substantial decline in land sales in Kendal Industrial Park and Kota Jababeka Cikarang because prospective foreign buyers face travel restrictions. Sales visibility remains low over the next few months, given that the spread of the virus in Indonesia has showed little signs of easing. Meanwhile, we expect recurring EBITDA from Jababeka's power plant, dry port, and estate management operations to remain subdued beyond 2020 at IDR340 billion-IDR360 billion...

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