IQPlus, (18/08) - Fitch Ratings has affirmed Indonesia-based property developer PT Kawasan Industri Jababeka Tbk's (Jababeka) Long-Term Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. At the same time, Fitch Ratings Indonesia has affirmed Jababeka's National Long-Term Rating at 'A(idn)' with a Stable Outlook. A full list of rating action is at the end of this commentary. 'A' National Ratings denote expectations of low default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions may affect the capacity for timely repayment to a greater degree than is the case for financial commitments denoted by a higher rated category.
Improving Fundamentals, Rising Competition: Indonesia's industrial sector is showing improved demand. However, Fitch believes Jababeka may face heightened competition and some profitability margin is at risk due to new product launches in its niche and regulatory developments. Jababeka reported attributable presales of IDR1.3 trillion in 2016, up by around 40% yoy on account of stronger industrial land demand in both its Cikarang and Kendal townships. Positive growth continued in 1H17, with attributable presales rising by more than 60% yoy in the last 12 months to 2Q17.
Fitch sees some short- to medium-term demand risk due to regulatory developments and a competitive landscape. The government has announced plans to introduce a price ceiling on Indonesia's industrial land sales, which may affect presales as some consumers defer purchases pending greater clarity. Furthermore, Fitch believes competition for residential property in Cikarang may increase with new the launch of a new township in the area. Fitch expects Jababeka to book attributable presales of IDR1.3 trillion in 2017 and IDR1.4 trillion in 2018. (end)
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