PT Pakuwon Jati Tbk.

The stable outlook on Pakuwon reflects our view that the company has sufficient financial flexibility to mitigate slowing sales and reduced recurring income amid the COVID-19 outbreak in Indonesia. It also reflects our view that: (1) Pakuwon will maintain prudent financial management by timing capital expenditure with cash collection, and (2) the credit profile of Pakuwon's majority shareholders will remain consistent with that of the company with limited leverage. We could lower the rating if we expect Pakuwon's debt-to-EBITDA ratio to consistently remain above 2.5x. This would primarily happen if the COVID-19 persists longer than we expect, resulting in subdued operations. It could also happen if the company departs from its cautious financial policies by substantially upsizing capital spending, dividend

...PT Pakuwon Jati Tbk.'s adequate financial buffer should mitigate slowing sales and reduced recurring income amid the COVID-19 outbreak in Indonesia. The company's large cash balance and track record of prudent financial management place it in a better position than other rated peers to weather the downturn. We anticipate Pakuwon's adjusted debt-to-EBITDA ratio will likely remain below 2.5x in 2020, after factoring in a 40%-45% decline in EBITDA due to the pandemic....

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