RPT-Fitch affirms Aneka Gas Industri at 'A-(idn)'; outlook stable

Wed Jun 11, 2014 6:23am EDT

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June 11 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the rating National Long-Term PT Aneka Gas Industry (AGI), producer of industrial gases, in 'A-(idn)' with Stable Outlook. Fitch also affirmed the ratings of S 200milyar II bonds and CAD 200milyar Sukuk Ijarah II in 2012, respectively at 'A-(idn)'.

National ranking in the category 'A' indicates the expectation would risk failure low pay relative to other issuers or securities in Indonesia. However, a change in circumstances or economic conditions may be affect the capacity to pay in a timely manner than commitment Financial shown by the higher rating categories.

Factors Supporting Rating

Increase leverage while Rising borrowing to support capital expenditures and income growth was slower than the increase of the ratio of expectations leverage AGI in 2013. ratio of net debt / operating EBITDA increased to 5.0x in 2013, over mold negative staging action set Fitch previously. However, Fitch considers that greater capacity and additional capital in 2014 to help companies produce higher cash flow and maintain good credit metrics. Fitch estimates leverage increases temporary and will fall below 4.0x by the end of 2014 onwards, according to the ranking.

Controlled execution risk: The Company is building a new plant, included in Bitung, Rungkut, Bontang, and Subang. Fitch believes that the risk execution is quite restrained, given that more than half the capacity This additional contracts already have medium or long term basis. Industry growth prospects are also positive, driven mainly by the medical sector, infrastructure, and commodities (such as crude palm oil and construction smelter). track record companies in completing large projects is also a positive factor the ranking.

Stable Margins: Supported by long-term contracts and customer base diversified, the company managed to maintain stable margins,. customer companies, including companies from the medical sector and processed foods including defensive industry.

Solid market position: AGI rating reflects the strong position as second largest industrial gas producer in Indonesia with more than 20% share market. Together with sister company PT Samator as, AGI control half of the market in Indonesia and about 90% of the medical gas market. Fitch believes that the company can maintain its leadership in the market, given the barrier to entry are relatively high.

Small-scale operations: Despite strong position in the domestic market, operational scale enterprises (2013 EBITDA: USD 23juta) considered small in global standards. While this may limit the operational flexibility and finance companies, Fitch believes that the company's expansion can increase the scale and helps more efficient operation with fee structure and better access to funding in the long term.

Capital injections from shareholders: The majority shareholder of showing commitment by injecting capital to support the expansion of the company since 2007. At This year, shareholders have menyuntuk S 100milyar and plans to injecting an extra £ 70milyar. The additional capital will help the company to maintain sufficient liquidity.

sensitivity rating

Positive: future developments that individually and collectively to raise levels:

- The decrease in the ratio of net debt / EBITDA below 3.0x on an ongoing basis

- The increase in business scale without a significant decrease in financial metrics

- Positive free cash flow on an ongoing basis

Negative: future developments that individually and collectively to lower level:

- increase the ratio of net debt / EBITDA above 4.0x on a sustained

- The increase in capital expenditures are not anticipated / expected

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