Four Indonesian Firms Suffer Significant Currency Mismatch

Photo : Special

JAKARTA (TheInsiderStories)Moody’s Investors Service said four Indonesia’s companies namely PT MNC Investama Tbk (IDX: BHIT, B3 negative), PT Gajah Tunggal Tbk (IDX: GJTL, B2 stable), PT Lippo Karawaci Tbk (IDX: LPKR, B2 negative), and PT Alam Sutera Realty Tbk (IDX: ASRI, B2 stable) are most exposed to currency depreciation due to significant mismatch.

In its recent report, the rating agency said these companies have more than 70 per cent of their debt in US dollars, but generate all, or a majority of their revenue in rupiah.

According to the report, 44 rated South and Southeast Asian high-yield non-financial companies have protection in place against a significant rise in debt levels or borrowing costs or a contraction in EBITDA, if their local currencies were to depreciate up to 15% against the US dollar.

“Twenty-seven companies generate nearly all of their revenues in US dollars or have contracts priced in US dollars providing natural hedges that limit the risk of local currency depreciation against the US dollar,” a Moody’s Vice President and Senior Credit Officer Annalisa DiChiara said in a press release on Wednesday (28/06).

Furthermore, another seven generate 15%-25% of their revenue in US dollars, have US dollars in cash on their balance sheets, have financial hedges or longer-dated maturities, or some combination of these protections.

Three Indonesian property companies use long-term hedges, which protect the principal amounts of their US dollar debt against a depreciation of the Indonesian rupiah up to predetermined levels.

Separately, three companies have no specific protections, but their leverage and stable or growing EBITDA help limit the effect of currency depreciation, while four companies have less than 10% of their total debt denominated in US dollars, and this low exposure makes protections unnecessary.

The 49 companies reported a combined US dollar debt total of $45.5 billion as of year-end 2017, or about 55% of their total outstanding debt.

MNC Investama recorded Rp811 in net loss in the first quarter of this year, a swing from Rp161.42 billion in net income in the same period last year. The company booked a slight growth of 2.52 per cent in revenue to Rp3.25 trillion in the first quarter this year from Rp3.17 trillion in the first quarter last year.

The biggest contributors came from the media of Rp2.47 trillion, financial institutions of Rp590.81 billion, and others of Rp192.17 billion. In the same quarter last year, the media contributed Rp2.43 trillion, followed by financial institutions of Rp587.60 billion and others of Rp153.85 billion.

Meanwhile, Gajah Tunggal booked 2.38 per cent growth in net sales to Rp3.17 trillion in the first quarter of this year (year on year/yoy). Despite the increase in sales, the company recorded down in net income due to the weakening of rupiah against US dollar.

The firm booked Rp51.78 billion in net income in the first quarter this year, significantly decreased by 75.98 per cent from a year earlier. In addition to the rupiah weakening, the decrease was due to higher prices of raw materials. As a result, the operating margin of the company decreased to 8.5% in the first quarter of this year from 9.8 per cent in the similar period of last year.

Furthermore, Lippo Karawaci recorded 5 per cent decrease in revenue to Rp2.5 trillion in the first quarter this year (yoy), while the net income dropped 7 per cent to Rp133 billion.

Meanwhile, Alam Sutera Realty still booked a decent performance in the first quarter of this year. The firm booked Rp1 trillion in revenue in the first quarter this year, grew by 44 per cent from Rp702 billion in the similar quarter last year. The company recorded Rp299.5 billion in the net income in the first three months this year, up 71 per cent from Rp178 billion in the first three months last year.

However, ASRI has bond debt of US$235 million due date on March 2020, with interest of 6.95% per annum and US$245 million on April 24, 2022, with an interest rate of 6.625% per annum. Both bonds accounted for more than half of the company Rp12.12-trillion liabilities by end of March.