Reuters logo
Fitch: Expected Positive Shift in Indonesian Corporate Credit Optimistic
October 18, 2016 / 8:11 AM / a year ago

Fitch: Expected Positive Shift in Indonesian Corporate Credit Optimistic

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 100 Indonesian Listed Corporates: Credit Change Zones 2016 here JAKARTA/SYDNEY, October 18 (Fitch) Fitch Ratings is less optimistic in its projections for 19 Indonesian corporates that it publicly rates compared with Bloomberg consensus estimates (BEst), which expect 75 of the top-100 listed non-financial corporates by market capitalisation (Indonesia100) to be in the credit-positive change zones of cash flow growth exceeding net debt growth over 2015 to 2017. BEst expectations are a dramatic shift from actual 2013-2015 outcomes, where 67 corporates were in the credit-negative change zones of net debt growth exceeding cash flow grow. The agency projects 11 of the 19 Fitch-rated top-100 corporates to be in credit-negative change zones, where leverage is forecast to rise, whereas BEst forecasts 13 to be in the credit-positive change zones. In addition, five corporates are in opposite credit change zones. Specifically, Fitch forecasts PT Garuda Indonesia (Persero) Tbk (BBB+(ind)/Stable, PT Astra Otoparts Tbk (AA-(ind)/Stable), PT Bumi Serpong Damai Tbk (BB-/Stable), PT Telekomunikasi Indonesia Tbk (BBB-/Stable) and PT Perusahaan Gas Negara Tbk (BBB-/Stable) to be in the credit-negative change zones (leverage to rise), whereas BEst forecasts these five corporates to be in the credit-positive change zones (leverage to fall). We ranked the top-100 corporates based on EBITDA changes as a proxy for cash flow and net debt changes over 2015-2017 using BEst projections to gauge credit trends, then compared this with the historical period over 2013-2015. We then grouped each company into one of four credit change zones: 1) the credit-positive Blue "Joy" Zone of higher cash flow and falling net debt; 2) the credit-positive Purple Zone of cash flow growth exceeding net debt growth; 3) the credit-negative Orange Zone of debt growth exceeding cash flow growth; and 4) the credit-negative Red "Pain" Zone of cash flow decline and rising net debt. The report contains scatter charts illustrating the credit zone of each company in both projected and historical periods. We believe market expectations of improving corporate credit profiles is driven more by projected higher EBITDA generation as opposed to lower debt and capex. BEst forecasts aggregate net debt/EBITDA leverage for the Indonesia100 portfolio to fall to 0.9x by 2017, from 1.2x in 2015, with leverage falling in six out of 10 major sectors. Specifically, leverage is forecast to fall most for corporates in the natural resources sector, followed by technology, media and telecommunications, retail, leisure and consumer products, utilities, energy and autos. BEst projects aggregate leverage to rise for construction and engineering, transport, health and pharmaceuticals and real estate sectors. The report includes Venn diagrams illustrating overlapping areas of our Top-10 lists based on BEst projections, particularly the Blue "Joy" Zone of strong cash-flow increases and debt pay-down and the Red "Pain" Zone of cash flow decline and rising net debt. The report also contains explanatory notes and rating sensitivities for the 19 Fitch-rated listed Indonesian corporates. The report is available at or by clicking on the link above. Contact: Matt Jamieson Head of APAC Research Corporate Ratings Group +61 2 8256 0366 Fitch Ratings Pty Ltd Level 15, 77 King Street, Sydney NSW 2000 Australia Olly Prayudi Associate Director +62 21 2988 6812 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: Additional information is available at ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below