Research Update: PT Kawasan Industri Jababeka Downgraded To 'B-' On Limited Financial Flexibility And Sales Visibility; Outlook Stable

Weakened consumer demand and difficulty in execution of land sales amid the COVID-19 pandemic have reduced Indonesia-based PT Kawasan Industri Jababeka Tbk.'s (Jababeka) sales visibility and financial flexibility. Jababeka's poor sales in 2020 and subdued recurring EBITDA will hurt EBITDA generation in 2021, weakening EBITDA interest coverage to below 1.5x. We are therefore lowering our long-term issuer credit rating on Jababeka to 'B-' from 'B'. The outlook is stable. We are also lowering our long-term issue rating on the company's guaranteed senior unsecured notes to 'B-' from 'B'. The stable outlook reflects our expectation that Jababeka will maintain healthy liquidity by balancing the weakened sales prospects with stringent working capital management, reduced discretionary capital spending, and controlling shareholder distributions. In

...- Weakened consumer demand and difficulty in execution of land sales amid the COVID-19 pandemic have reduced Indonesia-based PT Kawasan Industri Jababeka Tbk.'s (Jababeka) sales visibility and financial flexibility. - Jababeka's poor sales in 2020 and subdued recurring EBITDA will hurt EBITDA generation in 2021, weakening EBITDA interest coverage to below 1.5x. - We are therefore lowering our long-term issuer credit rating on Jababeka to 'B-' from 'B'. The outlook is stable. We are also lowering our long-term issue rating on the company's guaranteed senior unsecured notes to 'B-' from 'B'. - The stable outlook reflects our expectation that Jababeka will maintain healthy liquidity by balancing the weakened sales prospects with stringent working capital management, reduced discretionary capital spending, and controlling shareholder distributions....

Research Update