Research Update: PT Japfa Ratings Affirmed At 'BB-' On Parent Support; SACP Lowered To 'b+' On Weakening Demand; Outlook Negative

Solid half-year 2020 operating performance at Japfa Ltd. offset weaker-than-expected earnings at PT Japfa Comfeed Indonesia Tbk., consolidating the group's credit quality. We expect PT Japfa to remain an integral part of parent Japfa Ltd. and expect the parent to provide extraordinary financial support to the subsidiary if necessary. That's given PT Japfa's size, operating integration, name sharing and majority ownership. On Aug. 12, 2020, S&P Global Ratings affirmed its long-term issuer credit rating on PT Japfa and the issue rating on the Indonesian poultry producer's senior unsecured notes at 'BB-'. At the same time, we lowered PT Japfa's stand-alone credit profile (SACP) to 'b+' from 'bb-' to reflect likely weaker earnings and interest coverage ratios over the next 12

...- Solid half-year 2020 operating performance at Japfa Ltd. offset weaker-than-expected earnings at PT Japfa Comfeed Indonesia Tbk., consolidating the group's credit quality. - We expect PT Japfa to remain an integral part of parent Japfa Ltd. and expect the parent to provide extraordinary financial support to the subsidiary if necessary. That's given PT Japfa's size, operating integration, name sharing and majority ownership. - On Aug. 12, 2020, S&P Global Ratings affirmed its long-term issuer credit rating on PT Japfa and the issue rating on the Indonesian poultry producer's senior unsecured notes at '##-'. - At the same time, we lowered PT Japfa's stand-alone credit profile (SACP) to 'b+' from '##-' to reflect likely weaker earnings and interest coverage ratios over the next 12 months, amid steady capital spending. - The negative outlook indicates that we could lower the ratings if PT Japfa's operating performance and liquidity weakens, or if capital expenditure at Japfa Ltd. is higher...

Research Update