The rating on Indonesia-based industrial real estate developer PT Kawasan Industri Jababeka Tbk. (KIJA) reflects our view of the company's volatile cash flows, large capital expenditure for greenfield infrastructure projects, and high project concentration risk. KIJA's record of developing and managing a large industrial estate in Cikarang (near Jakarta), its large low-cost land bank, and increasing recurring income temper these weaknesses. We assess the company's business risk profile as "weak" and its financial risk profile as "aggressive." KIJA's cash flows are volatile because industrial land sales are sensitive to economic cycles and depend on foreign direct investments. The company's single-project risk and keen competition from other industrial estates in Cikarang exacerbate the volatility. More than 50% of KIJA's revenues will
