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May 20 (The following statement was released by the rating agency)
Fitch Ratings has affirmed the rating Long-Term National Tbk PT Mitra Pinasthika Mustika
(MPM) at 'A (idn)', and at the same time pull rank. Outlook on the ratings
is Stable. Fitch has decided to discontinue ranking is not compensated.
Factors Ranked movers
Improvement of operational performance: The company's expansion in the car rental business
has resulted in operating cash flow and diversification of higher
revenue streams to balance the volatility of the retail auto business.
Performance motorcycle financing subsidiary, PT Sasana Artha Finance (SAF),
also improved. SAF has reported positive net income for 2013, after
mebukukan losses for the previous three years. Overall, we see
improvement in credit metrics compared with the previous year. debt ratio
net / EBITDA declined to 3.6x in 2013 from 5.2 x in the year 2012.
Coverage ratio as measured by operating EBITDA / interest expense, also improved to
5.9 x 4.7 x in the same period the previous year.
Diversification of income: MPM rating is supported by the diversification
offset the volatility of the motor retail business. Other business enterprises
includes manufacturers of motor lubricants, car rental services, financing, and
insurance. Compared to the automotive retail business, leasing business and
lubricants produce a more stable income and higher margins.
Since this year, MPM will also sell the Nissan and Datsun.
Market Leadership: MPM rating also reflects its leadership in the
its businesses. MPM is a leading distributor of Honda motorcycles in East Java and
East Nusa Tenggara, which is where the company has 67% market share.
The company is also the second largest car rental company based
fleet, and being one of the largest motorcycle manufacturers in the lubricant
The new structure for the subsidiary and new shareholders: Fitch
positive view MPM plans to merge two subsidiaries
financing - MPM Finance (A-(idn) '/ stable) and SAF - and partnered with
JACCS. JACCS, finance companies in Japan, will inject funds and
take effective 40% ownership in the combined company. Fitch expects
JACCS arrival will provide funding and access to more knowledge
well, particularly in the field of risk management.
Expansion is limited by: Rating companies limited by its expansion
especially in the field of car rental and car distribution which will raise the ratio
debt. We estimate free cash flow (free cash flow) to remain negative
within the next three years. However, Fitch believes that most of the spending
capital can be lowered and the company has a good track record in
execution. Fitch also believes that the company's liquidity will remain adequate
given the company access to bank and capital markets are quite good.