Danareksa Credit Score Infrastructure and Property Sector

DEBT RESEARCH

CREDIT REPORT JULY 2014

Danareksa Credit Score Infrastructure and Property Sector The first half of 2014’s edition of Danareksa Credit Score will focus on the infrastructure and property sectors. Our analysis includes an overview of the two sectors, complete with credit scores and a brief review of the performance of some of the issuers. Credit score analysis covers 6 companies for the infrastructure sector and 12 companies for the property sector.

Country

Infrastructure: In A Building Stage

INDONESIA

• Bright prospects • Resilient performance

Country Rating

The performance of companies in the infrastructure sector can be considered to be fairly good, as reflected in the Investment Grade ratings of the 6 companies in this sector which ranged from A- to AAA with credit scores in the safe zone ranging from 12 to 18. Most of the companies have seen rating upgrades whilst credit scores have also improved. Since 2012, 3 companies have been experienced rating upgrade and 3 companies have been successfully maintained their rating.

S & P

(LTLC)

BB+

Moody’s

(LTLC)

Baa3

Fitch

(LTLC)

BBB-

Danareksa Credit Score (DCS) edisi semester pertama tahun 2014 ini akan membahas mengenai sektor infrastruktur dan properti. Pembahasan yang dilakukan mencakup ulasan sektor dan obligasi sektor terkait, disertai dengan credit score dan review singkat terhadap kinerja beberapa emiten. Analisa credit score pada sektor infrastruktur mencakup 6 perusahaan, sedangkan pada sektor properti mencakup 12 perusahaan.

Perusahaan dalam sektor ini dapat dikatakan memiliki kinerja yang tergolong baik, tercermin dari rating keenam perusahaan yang berada dalam Investment Grade dengan rating A- sampai AAA dan nilai credit score pada zona aman dengan rentang nilai 12 sampai 18. Sebagian besar perusahaan mengalami peningkatan rating secara perlahan, begitu pula dengan credit score yang juga menunjukkan tren peningkatan. Sejak tahun 2012, terdapat 3 perusahaan yang ratingnya meningkat dan 3 perusahaan yang berhasil mempertahankan ratingnya.

Property: Optimism Remains Analyst Melissa Hartono +62-21-29555777 ext. 3402 [email protected]

Please read important disclosure at the back of this report. www.danareksa.com Bloomberg Ticker: DFMJ

• Slowing but with a positive outlook • Residential property: diminishing growth Although the property sector overcame some stiff challenges on the macroeconomic front in 2013, the sector still faces the risk of a slowdown this year, partly due to the policy decisions made last year. There are 12 companies in this sector, 8 of which have Investment Grade ratings ranging from A- to AAA and credit scores in the safe zone ranging from 12 to 18. The remaining companies have Non Investment Grade ratings below Aand credit scores below 11,99. Since 2012, 8 companies have successfully maintained their rating, 2 companies have seen upgrades and 1 company has received a downgrade.

Meskipun telah berhasil melalui tantangan makroekonomi di tahun 2013, sektor ini masih harus menghadapi risiko perlambatan di tahun ini yang antara lain merupakan akibat dari kebijakan di tahun lalu. Dari 12 perusahaan di sektor ini, 8 diantaranya berada dalam Investment Grade dengan rating pada level A- sampai AAA dan nilai credit score 12 sampai 18 yang berada pada zona aman. Selebihnya berada pada Non Investment Grade dengan rating di bawah A- dan nilai credit score di bawah 11,99. Sejak tahun 2012, terdapat 8 perusahaan yang berhasil mempertahankan ratingnya, 2 perusahaan dengan rating yang meningkat, dan 1 perusahaan yang mengalami penurunan rating.

Infrastructure Sector In A Building Stage Bright prospects The infrastructure sector is considered to have good prospects, given the huge potential for infrastructure development which is needed for continued economic growth. The development and enhancement of infrastructure is part of MP3EI Program (Masterplan of Acceleration and Expansion of Indonesia’s Economic Development) which focuses on the development of major infrastructure projects such as power plants, highways, and ports. As a result, the Government has prioritized the groundbreaking of 40 MP3EI infrastructure projects in 20142017 with total investment amounting to IDR337 trillion (or USD29.30 billion).

Prospek usaha yang cerah Sektor infrastruktur dinilai memiliki prospek yang baik, dilihat dari besarnya potensi dan ruang untuk berkembang dalam rangka meningkatkan pertumbuhan ekonomi. Pembangunan dan peningkatan infrastruktur merupakan bagian dari Program MP3EI (Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia) yang fokus pada pembangunan proyekproyek infrastruktur utama seperti pembangkit listrik, jalan tol dan pelabuhan. Terkait hal itu, Pemerintah memprioritaskan 40 proyek infrastruktur MP3EI yang akan di groundbreaking pada tahun 2014-2017 dengan total investasi senilai Rp337 triliun (atau USD29,30 miliar).

Resilient performance Macroeconomic indicators did not provide strong support for brisk economic growth in 2013. Rupiah volatility, relatively high year-on-year inflation of 8.38% at year-end 2013 and a widening trade deficit which reached 4.4% of GDP in 2Q13 were some of the main challenges faced by the economy. Nevertheless, the performance of companies in the infrastructure sector was not significantly affected. In particular, the weaker Rupiah did not have a major impact since most of the raw materials used are denominated in Rupiah.

Kinerja yang tangguh Indikator makroekonomi di tahun 2013 cenderung kurang kondusif untuk menunjang pertumbuhan ekonomi yang pesat. Volatilitas nilai tukar rupiah, inflasi tahunan yang mencapai 8,38% di akhir tahun dan defisit neraca perdagangan yang sempat melebar hingga mencapai 4,4% dari GDP pada 2Q13 turut menjadi faktor penyebab terhambatnya aktivitas pelaku usaha dalam negeri. Meskipun demikian, belum terlihat adanya pengaruh negatif yang signifikan terhadap kinerja perusahaan-perusahaan di sektor ini. Melemahnya nilai tukar Rupiah tidak berdampak banyak mengingat sebagian besar bahan baku yang digunakan menggunakan mata uang Rupiah.

Bonds sector overview In the capital markets, there have already been 51 bond issuances in the infrastructure sector with a total value of IDR26.53 trillion (or USD2.31 billion) issued in the period from 2007 until 1Q14. Most of the bonds were issued with tenors from 1 to 15 years with 5-year tenor bonds dominating, followed by 7-year tenor bonds. The characteristics of infrastructure development (long term in nature) explains why the majority of the bonds have medium to long tenors.

Ulasan obligasi sektoral Di pasar modal, sektor infrastruktur telah menerbitkan 51 obligasi dengan total nilai Rp26,53 triliun (atau USD2,31 miliar) dari tahun 2007 sampai dengan 1Q14. Obligasi ini diterbitkan dengan tenor yang bervariasi dari 1 sampai 15 tahun dengan mayoritas pada obligasi bertenor 5 tahun, diikuti dengan obligasi bertenor 7 tahun. Karakteristik pembangunan infrastruktur yang umumnya membutuhkan waktu yang tidak singkat menjadi salah satu penyebab sebagian besar obligasi di sektor infrastruktur diterbitkan dengan tenor menengah dan jangka panjang.

Exhibit 1. Bonds issuance volume in the infrastructure sector

Exhibit 2. Number of bonds based on tenor

9,000

18 16

7,000

5,000

14 5,000

4,000 3,000

2,500

2,200

2,000

1,000

615

1,000

Number of Bonds

IDR billion

6,000

12

2007

2008

2009

2010

2011

2012

2013

1Q 2014

10

10

8

8

9

6 4 2

0

2

2

1

0 1

3

5

7

10

12

15

Tenor (years)

Year Source: IDX

19

20 7,713

7,500

8,000

Source: IDX 2

Infrastructure Sector Per Mei 2014, total nilai outstanding obligasi korporasi di sektor infrastruktur mencapai Rp28,87 triliun (atau USD2,51 miliar) dengan jumlah 49 obligasi dan terdapat 3 obligasi yang jatuh tempo pada 2H14. Data yang lebih rinci dapat dilihat pada Appendix 1.

As of May 2014, the total value of outstanding corporate bonds in the infrastructure sector reached IDR28.87 trillion (or USD2.51 billion) comprising of 49 bonds with 3 of them maturing in 2H14. More details can be seen in Appendix 1.

Exhibit 3. Ratings and danareksa credit score for infrastructure sector companies Rating

Ticker

1Q12 2Q12

3Q12

4Q12

1Q13

2Q13 3Q13

4Q13

1Q14

Jasa Marga JSMR AA AA AA AA AA AA AA AA AA Citra Marga Nusaphala Persada CMNP - A- A- A- A- - - - Wijaya Karya WIKA - A+ A+ A+ A+ A+ A+ A+ A+ Adhi Karya (Persero) ADHI A- A A A A A A A A Pembangunan Perumahan PTPP - - - A- A- A- A- A A Waskita Karya (Persero) WSKT A- A- A- A- A A A A A Credit Score Ticker 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Jasa Marga Citra Marga Nusaphala Persada Wijaya Karya Adhi Karya (Persero) Pembangunan Perumahan Waskita Karya (Persero)

JSMR 12.84 12.80 13.01 13.34 12.96 13.57 13.11 14.40 15.07 CMNP 11.46 14.11 14.40 12.02 12.46 18.00 15.91 16.02 15.76 WIKA 12.11 13.01 12.53 12.55 12.67 12.91 12.57 13.75 14.36 ADHI 12.29 13.44 12.74 11.96 12.52 12.39 12.60 12.98 12.75 PTPP 10.46 12.78 12.23 12.11 12.17 11.80 12.01 12.66 12.54 WSKT - - - - 11.79 11.41 11.73 12.53 12.11

Source: Pefindo, Bloomberg, Danareksa Estimates Kinerja rating dan credit score yang baik Perusahaan-perusahaan dalam sektor infrastruktur memiliki kinerja yang tergolong baik, tercermin dari pergerakan rating dan credit score perusahaan di sektor ini yang cenderung stabil dan meningkat. Per Maret 2014, terdapat 6 perusahaan emiten obligasi di sektor infrastruktur, yaitu PT Jasa Marga Tbk. (JSMR), PT Citra Marga Nusaphala Persada Tbk. (CMNP), PT Wijaya Karya Tbk. (WIKA), PT Adhi Karya (Persero) Tbk. (ADHI), PT Pembangunan Perumahan Tbk. (PTPP), dan PT Waskita Karya (Persero) Tbk. (WSKT). Sebagian besar perusahaan mengalami peningkatan rating secara perlahan, kecuali rating CMNP yang sempat mengalami kenaikan dan penurunan hingga akhirnya stabil di rating A-.

Good credit score & rating performance The performance of companies in the infrastructure sector can be considered to be very good, reflected by their ratings and credit scores which have tended to show stable and improving performance. As of March 2014, 6 companies in this sector have issued bonds, namely: PT Jasa Marga Tbk. (JSMR), PT Citra Marga Nusaphala Persada Tbk. (CMNP), PT Wijaya Karya Tbk. (WIKA),PT Adhi Karya (Persero) Tbk. (ADHI), PT Pembangunan Perumahan Tbk. (PTPP), dan PT Waskita Karya (Persero) Tbk. (WSKT). Most of the companies have seen gradual rating upgrades, except CMNP whose rating has fluctuated before finally stabilizing at A-. Exhibit 4. Rating and danareksa credit score 18

CMNP*

16 14

WIKA JSMR

ADHI

12

PTPP

WSKT

10 8 6 4

AAA

AA+

AA

AA-

A+

A

A-

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

CCC

SD

D

0

B-

2

Source: Pefindo, Bloomberg, Danareksa Estimates *using the last rating for currently non-rating company

3

Infrastructure Sector Exhibit 4 memetakan hubungan antara rating dan credit score dari perusahaan dalam sektor ini. Garis 45 derajat di tengah area grafik merupakan nilai wajar (fair value) rating yang sesuai dengan perusahaan. Dari gambar terlihat bahwa hanya ada 2 perusahaan yang berada pada nilai wajarnya, yaitu ADHI dan PTPP. Rating yang lebih rendah dibandingkan credit score menunjukkan prospek bisnis perusahaan yang dinilai kurang kondusif dan sifat bisnis perusahaan dengan ruang perkembangan yang terbatas. Sebaliknya, rating yang lebih tinggi dari credit score menandakan prospek bisnis perusahaan yang baik dan optimisme atas ekspansi perusahaan.

Exhibit 4 demonstrates the relationship between the ratings and the credit scores of companies in this sector. The 45° line in the middle of the chart represents the company’s fair value. As we can see in the picture, there are only 2 companies that are actually valued at their fair value: ADHI and PTPP. A rating lower than the credit score implies less bright business prospects and limited room for the company to develop its business. By contrast, a rating higher than the credit score suggests good business prospects and optimism toward the company’s future expansion.

JSMR: Expanding the Limit Maintaining position Jasa Marga’s performance has continued to improve over time. This is reflected in a ratings upgrade from A+ in 2007 to AA in 2010 which has been maintained until 1Q14. Based on Exhibit 5, we can see that the rating and credit score has been stable with the company’s rating consistently better than its credit score. This suggests that JSMR has good business prospects over the coming years. In 2013, JSMR’s revenues increased by 13% yoy. However, as expenses jumped 25%, the company’s net income dropped 19%. On the company’s balance sheet, its intangible assets (toll concession rights) posted an increase while liabilities in the form of bank loans and bonds also increased. Higher retained earnings, meanwhile, led to an increase in equity. As of December 2013, JSMR managed 560 km of toll roads or 73% of the total toll roads in Indonesia with traffic volume reaching 83% of the total traffic nationally.

Mempertahankan posisi Jasa Marga berhasil meningkatkan kinerja perusahaannya dari tahun ke tahun. Hal ini tercermin dari peningkatan rating perusahaan yang semula A+ di tahun 2007 menjadi AA di tahun 2010 dan masih bertahan sampai 1Q14. Dari Exhibit 5, dapat terlihat bahwa JSMR memiliki pergerakan rating dan credit score yang stabil dimana rating perusahaan secara konsisten lebih tinggi dari credit score. Rating yang lebih tinggi dari credit score mengimplikasikan prospek usaha yang baik dan luasnya potensi bisnis JSMR untuk berkembang di masa mendatang. Selama tahun 2013, pendapatan JSMR meningkat 13% yoy, diikuti dengan kenaikan beban sebesar 25% dan penurunan laba tahun berjalan 19%. Perubahan dalam neraca antara lain disebabkan oleh meningkatnya nilai aset tak berwujud – hak pengusahaan jalan tol; peningkatan liabilitas dalam bentuk utang bank dan obligasi serta peningkatan saldo laba pada ekuitas. Per Desember 2013, JSMR menguasai 560 km jalan tol atau 73% dari total panjang jalan tol di Indonesia dan 83% pangsa pasar dari volume lalu lintas transaksi nasional.

Exhibit 5. JSMR ratings and credit score 18 16

AA-

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

AA

2.5

14 12

2

10

1.5

8 6

1

4

0.5

Debt to Equity (RHS)

Debt to Equity Industry (RHS)

Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

2 0

3

0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates

4

Infrastructure Sector Tolerable level of debt While the company’s debt to equity ratio is low, it is still higher than the industry figure - which has mostly been less than 1x. The company’s debt to equity ratio reached a high of 1.5x in 3Q13 and back to 1.1x in 4Q13, which still far lower than the bond covenant’s maximum figure of 5x.

Tingkat hutang dalam batas wajar JSMR memiliki rasio debt to equity yang rendah, namun tergolong tinggi jika dibandingkan dengan rasio industri yang pada sebagian besar periode berada di bawah 1x. Rasio ini mencapai angka tertingginya sebesar 1,5x di 3Q13 dan kembali turun ke 1,1x di 4Q13. Angka ini masih jauh di bawah persyaratan dalam perjanjian obligasi dimana nilai maksimum yang diperbolehkan untuk rasio tersebut adalah 5x.

Exhibit 6. JSMR financial highlights

Exhibit 7. JSMR bonds recent issuance

2012 9,070 (6,095) 2,975 1,536 24,754 14,966 9,788

Revenue Operating Expense Operating Income Net Income Total Assets Total Liabilities Total Equity

2013 10,295 (7,631) 2,663 1,238 28,366 17,499 10,867

change 13% 25% -10% -19% 15% 17% 11%

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) JSMR01CCN1S 27-Sep-13 27-Sep-18 idAA JSMR01BCN1S 27-Sep-13 27-Sep-16 idAA JSMR01ACN1S 27-Sep-13 2-Oct-14 idAA

Source: Company

5 3 1

8.9 1,000 8.7 400 8.4 700

Source: IDX

ADHI: Optimizing Opportunities Standing firm ADHI had managed to maintain an A- rating as of 2Q07, with the rating upgraded to A in 2Q12. The rating and credit score moved in the same direction with the rating upgrade followed by a higher credit score. As depicted in Exhibit 8, the difference between the two indicators is very small, meaning that ADHI has already been able to maximally utilize its business development opportunities. ADHI still posted strong performance in 2013, shown by 28.5% growth in revenues to IDR9.7 trillion and net income jumping 91.9% to IDR405.9 billion. Some external factors such as adverse developments of the domestic and global economic front resulted in the postponement of some projects.

Tetap kokoh ADHI mempertahankan kinerjanya di rating A- sejak 2Q07 dan meningkat menjadi A pada 2Q12 yang masih bertahan hingga saat ini. Rating dan credit score perusahaan berjalan searah dimana kenaikan rating yang terjadi tergambar pada grafik credit score yang juga menunjukkan tren peningkatan. Seperti yang terlihat pada Exhibit 8, kedua indikator ini memiliki gap yang sangat kecil yang artinya ADHI telah mampu untuk memanfaatkan kesempatan pengembangan usaha hampir secara maksimal. Adhi Karya termasuk salah satu perusahaan dengan kinerja cemerlang di tahun 2013, dimana pendapatan usaha tumbuh 28,5% menjadi Rp9,7 triliun dan laba bersih meningkat 91,9% menjadi Rp405,9 miliar. Beberapa faktor eksternal seperti tantangan ekonomi domestik maupun global berakibat pada penundaan pelaksanaan beberapa proyek.

Exhibit 8. ADHI ratings and credit score 18

3

16 14

A-

A-

A-

A-

A-

A-

A-

A-

A-

A

A

A

A

A

A

A

A

12

2

10

1.5

8 6

1

4

0.5



Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

2 0

2.5

0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates 5

Infrastructure Sector Pattern in debt Compared to industry figures, ADHI’s debt to equity ratio has been noticeably high and has always been above the average. It peaked at 2.5x in early 2007, but then gradually declined and has stayed below 1.5x since 4Q11. Generally, ADHI’s debt to equity ratio declines in the last quarter of the year and goes up again at the beginning of the year. As of December 2013, ADHI’s debt to equity ratio stood at 1.1x, higher than its level in December 2012 of 0.8x.

Pola tertentu pada hutang Dibandingkan dengan rasio industri, rasio debt to equity ADHI tergolong tinggi dan selalu berada di atas rata-rata. Angka tertinggi yang pernah dicapai adalah 2,5x di awal tahun 2007, namun berangsur-angsur turun dengan nilai di bawah 1,5x sejak 4Q11. Rasio ini mempunyai kecenderungan menurun di akhir tahun dan kembali meningkat di awal tahun. Per Desember 2013, rasio debt to equity ADHI berada di level 1,1x, lebih tinggi dibandingkan Desember 2012 sebesar 0,8x.

Exhibit 9. ADHI financial highlights

Exhibit 10. ADHI bonds recent issuance

2012 7,628 (531) 512 213 7,872 6,691 1,181


2013 9,800 (425) 823 408 9,721 8,172 1,548

change 28% -20% 61% 91% 23% 22% 31%

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) ADHISM1CN2 15-Mar-13 15-Mar-18 idA(sy) ADHI01BCN2 15-Mar-13 15-Mar-20 idA ADHI01ACN2 15-Mar-13 15-Mar-18 idA

Source: Company

5 7 5

8.1 125 8.5 500 8.1 125

Source: IDX

PTPP: Keep Moving Forward Aiming higher PTPP obtained an A- rating in 4Q12 which was later upgraded to A in 4Q13. The rating and credit score have moved in the same direction (as shown in Exhibit 11). The small gap between these 2 indicators suggests that PTPP has already been able to maximally utilize its business development opportunities. Revenues reached IDR11.6 trillion in 2013, or up 46% compared to the previous year. Overall, PTPP’s performance in 2013 was better than targeted. In 2014, the construction sector will remain as the company’s main source of revenues, albeit with a focus on projects worth higher than IDR50 billion.

Menggapai yang lebih tinggi PTPP mendapatkan rating A- pada 4Q12 dan menjadi A pada 4Q13. Rating dan credit score perusahaan bergerak sejalan seperti yang terlihat pada Exhibit 11. Semakin minimnya gap antar kedua indikator ini menunjukkan bahwa PTPP telah menggunakan peluang dan melakukan upaya pengembangan usaha secara maksimal. Perusahaan membukukan pendapatan sebesar Rp11,6 triliun pada tahun 2013, meningkat 46% dibandingkan tahun sebelumnya. Secara umum, pencapaian kinerja PTPP di tahun 2013 berada di atas target yang telah ditetapkan. Menghadapi tahun 2014, sektor konstruksi akan tetap menjadi sumber pendapatan utama perusahaan dengan fokus pada proyek-proyek bernilai di atas Rp50 miliar.

Exhibit 11. PTPP ratings and credit score 18

3

16 14

A-

A-

A-

A-

A

A

12

2

10

1.5

8 6

1

4

0.5



Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

2 0

2.5

0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates 6

Infrastructure Sector DER: always above average The company’s debt to equity ratio has always been far above the industry average, implying that PTPP tend to utilize more debt compared to other similar companies. This ratio increased from 1.4x in 2012 to 1.7x in 4Q13 since liabilities rose more than equity due to: 1) the corporate action of acquiring PT PP Dirganeka and 2) the increase in issued bonds in 2013.

Exhibit 12. PTPP financial highlights Revenue Operating Expense Operating Income Net Income Total Assets Total Liabilities Total Equity Source: Company

2012 8,004 (144) 711 310 8,551 6,895 1,656

DER: selalu di atas rata-rata Rasio debt to equity PTPP selalu berada jauh di atas rata-rata industri yang menunjukkan bahwa perusahaan menggunakan lebih banyak hutang dibandingkan perusahaan sejenis lainnya. Rasio ini meningkat dari 1,4x di tahun 2012 menjadi 1,7x pada 4Q13, antara lain disebabkan oleh kenaikan liabilitas yang lebih besar dari ekuitas yang didorong oleh aksi korporasi mengakuisisi PT PP Dirganeka serta peningkatan utang obligasi yang diterbitkan di tahun 2013.

Exhibit 13. PTPP bonds recent issuance 2013 11,656 (200) 1,073 421 12,416 10,431 1,985

change 46% 39% 51% 36% 45% 51% 20%

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) PTPP01CN1 19-Mar-13 19-Mar-18 idA- 5 8.375 700

Source: IDX

7

Property Sector Optimism Remains Slowing but with a positive outlook Indonesia’s property sector has enjoyed robust growth, marked by a large number of residential and commercial property developments. Prices have also increased significantly. This has raised fears of a potential property bubble and prompted the Government to take preventative action. In 2013, some policies were taken to rein in the growth of the domestic property sector. Besides hikes in the BI reference rate from 5.75% to 7.5%, the new loan-to-value (LTV) policy requires higher down payments for property purchases (up from 20% to 30%) which are progressive for subsequent property purchases. Nonetheless, the property sector still retains its positive outlook for the long term, underpinned by the high level of urbanization and the rapid growth of the middle-class.

Outlook positif meskipun terjadi perlambatan Perkembangan pesat industri properti di Indonesia terlihat dari semakin maraknya pembangunan properti,baik tipe residensial maupun komersial. Harga properti yang kian tinggi seiring dengan pertumbuhan industri ini menimbulkan kekhawatiran akan terjadinya bubble properti sehingga mendorong Pemerintah untuk mengambil tindakan pencegahan. Di tahun 2013, beberapa kebijakan yang dikeluarkan oleh Bank Indonesia berpotensi menghambat perkembangan industri properti dalam negeri, antara lain kenaikan tingkat suku bunga acuan (BI rate) dari 5,75% menjadi 7,5% dan kebijakan loanto-value (LTV) dengan menaikkan pembayaran uang muka properti dari 20% menjadi 30% yang berlaku progresif untuk pembelian properti berikutnya. Namun demikian, prospek industri properti Indonesia masih dinilai positif untuk jangka panjang melihat tingginya tingkat urbanisasi dan pesatnya peningkatan jumlah masyarakat kelas menengah.

Residential property: diminishing growth Based on the survey conducted by Bank Indonesia, the Residential Property Price Index (IHRP) stood at 173.38 in 1Q14, up 1.45% (qoq). However, these numbers show a slower pace of growth compared to 4Q13 when growth reached 1.77% (qoq). As a consequence of the new LTV policy which was implemented in September 2013, residential property sales also experienced a slowdown. Growth slipped to 15.33% from 31.54% in 4Q13. This sluggish growth is reflected in slower growth of House Ownership Credit (KPR) in 1Q14 which reached IDR282.36 trillion (or USD24.55 billion), or up 0.32%, yet slower than the previous quarter growth of 2.21%.

Properti residensial: perlambatan pertumbuhan Berdasarkan survey yang dilakukan oleh Bank Indonesia, Indeks Harga Properti Residensial (IHRP) pada 1Q14 berada pada level 173,38, meningkat 1,45% (qoq) dibandingkan pertumbuhan di 4Q13 sebesar 1,77% (qoq). Sebagai dampak dari penerapan kebijakan LTV yang berlaku sejak September 2013, pertumbuhan penjualan properti residensial juga mengalami perlambatan menjadi 15,33% (vs 31,54% pada 4Q13). Perlambatan juga tercermin dari turunnya penyaluran KPR perbankan pada 1Q14 sebesar Rp282,36 triliun (USD24,55 miliar), meningkat 0,32%, lebih rendah dari pertumbuhan kuartal sebelumnya sebesar 2,21%.

Exhibit 1. Residential Property Price Index (IHRP) 180.00

15.00

150.00

12.00

9.00 90.00 6.00 60.00

% of change

Index**

120.00

3.00

30.00 0.00

0.00 I

II

III

IV

2009

I

II

III

2010 IHPR (LHS)

IV

I

II

III

IV

I

2011 qoq (%) (RHS)

II

III

2012

IV

I

II

III

IV

2013

I

II*

2014

yoy(%) (RHS)

Source: Bank Indonesia *prediction **base year 2002 = 100

8

Property Sector Commercial property: moderate growth Slowing growth was also seen in the commercial property segment which comprises 5 segments: offices, retail, apartments, hotels, and industrial land. Office rental tariffs in Jakarta declined along with the increasing supply, while offices for sale experienced positive growth for both supply and selling prices. Stagnant circumstance shown by the supply of rented apartments, on the contrary with rising supply and sales price of condominiums. The commercial property sector’s moderate growth is also reflected in the slowdown in the growth of loans channelled to this sector in 1Q14 (based on February 2014 data) of IDR471.35 trillion (or USD40.98 billion), up 0.32% qoq or 22.69% yoy. This figure is 14.30% of the total loans disbursed by banks of IDR3,296.1 trillion (or USD286.62 billion).

Properti komersial: pertumbuhan yang moderat Perlambatan juga ditunjukkan oleh properti komersial yang terbagi dalam 5 segmen, yaitu perkantoran, pusat perbelanjaan, apartemen, hotel, dan lahan industri. Tarif sewa perkantoran di Jakarta menurun seiring dengan meningkatnya pasokan, sedangkan perkantoran jual mengalami kenaikan dari segi pasokan dan harga jual. Kondisi stagnan ditunjukkan oleh pasokan apartemen sewa, berbeda dengan peningkatan yang terjadi pada pasokan dan harga jual kondominium. Perlambatan pertumbuhan juga terlihat dari menurunnya angka penyaluran kredit perbankan pada sektor ini di 1Q14 (data Februari 2014) dengan nilai Rp471,35 triliun (atau USD40,98 miliar), tumbuh 0,32% qoq atau 22,69% yoy. Nilai kredit ini mencerminkan 14,30% dari total kredit yang dikeluarkan perbankan sejumlah Rp3.296,1 triliun (atau USD286,62 miliar).

Exhibit 2. Commercial property price growth rate

Exhibit 3. Commercial property rental growth rate 50

80 70

Retail Hotel Office Apartment Industrial Land

40

60

30

% of growth

% of growth

50 40 30 20

20 10

10

0 2009

0 -10

2009

Office

2010

2011

Retail

2012

2013

Apartment

1Q-2014 (yoy)

Industrial Land

Source: Bank Indonesia

2010

2011

-10

2012

2013

1Q-2014 (yoy)

-20


35

14

30

12

25

10

20

8

15

6

10

4

5

2

0

% of growth

% of growth

Exhibit 4. Commercial property supply growth rate Total Supply as of 1Q – 2014 (m2): Office Rent : 6.907.006 Retail Rent : 4.194.961 Apt. Rent : 12.030 Office For Sale : 1.463.921 Retail For Sale : 1.756.795 Apt. For Sale : 97.541 Hotel : 27.538 Industrial Land : 6.771

0 2009 Office Rent (RHS) Office For Sale Hotel

2010

2011

2012

Retail Rent (RHS) Retail For Sale Industrial Land

2013

1Q-2014 (yoy) Apartment Rent (RHS) Apartment Condominium


9

Property Sector Graphs in Exhibit 2 – 4 depict yoy growth of rental tariffs, selling price and supply of the 5 segments. In Exhibit 2, we can see the selling price growth of office, retail, apartment (condominium), and industrial land where yoy growth in 1Q14 for all segments in charts went down, except retail property for sale which increased by 25.53%. Exhibit 3 displayed rental tariffs for all segments which also showed downward trend in yoy growth. Rising rental tariffs were only seen in apartment (condominium) by 13.03% and hotels by 5.43%. Supply growth of property for sale and for rent shown in Exhibit 4. Apartment and industrial land supply did not see any growth, yoy growth that higher than 2013 only occurred in office for sale; office for rent; and hotels, the rest segments experienced slowing growth.

Grafik pada Exhibit 2 – 4 menggambarkan pertumbuhan yoy harga sewa, harga jual dan supply dari kelima segmen. Pada Exhibit 2 dapat dilihat pertumbuhan harga jual perkantoran, pusat perbelanjaan, apartemen (kondominium), dan lahan industri dimana pertumbuhan yoy pada 1Q14 untuk semua segmen dalam grafik mengalami penurunan, kecuali harga jual pada pusat perbelanjaan jual yang meningkat 25,53%. Exhibit 3 menampilkan pertumbuhan harga sewa seluruh segmen, yang juga cenderung turun untuk pertumbuhan yoy. Kenaikan harga sewa hanya terjadi pada apartemen (kondominium) (13,03%) dan hotel (5,43%). Pertumbuhan supply baik sewa maupun jual tergambar pada Exhibit 4. Supply apartemen sewa dan lahan industri tidak mengalami pertumbuhan, pertumbuhan yoy yang lebih dari 2013 terjadi pada perkantoran jual dan sewa serta hotel, selebihnya mengalami penurunan pertumbuhan.

Bonds sector overview In the bonds market, the total property sector bonds issued in the period from 2007 to 1Q14 reached IDR12.13 trillion coming from 31 bond issuances. The tenors varied from 2 to 7 years with 5-year bonds accounting for more than 50% of the total bond issuances, followed by 3-year bonds. As depicted in Exhibit 5, bond issuances from the property sector reached their highest level in 2013, amounting to IDR4.3 trillion.

Ulasan obligasi sektoral Di pasar obligasi, jumlah obligasi yang telah diterbitkan oleh sektor properti dalam rentang waktu tahun 2007 sampai dengan 1Q14 mencapai 31 obligasi dengan total nilai Rp12,13 triliun. Tenor yang digunakan bervariasi dari 2 sampai 7 tahun dengan mayoritas penerbitan obligasi bertenor 5 tahun melebihi 50% dari jumlah obligasi yang diterbitkan, kemudian diikuti oleh tenor 3 tahun. Seperti yang terlihat pada Exhibit 5, volume penerbitan obligasi sektor properti mencapai puncaknya pada tahun 2013 dengan total Rp4,3 triliun.

Exhibit 5. Bonds issuance volume in the property sector

Exhibit 6. Number of bonds based on tenor

5,000 4,300

4,500

18

4,000

16

3,400

14

3,000 2,500 2,000 1,500 825

500

1,250

1,200

1,000

2008

2009

12

2010

Year

2011

2012

2013

1Q 2014

9

10 8 6 4 2

150 2007

Number of Bonds

IDR billion

3,500

1,000

19

20

2

1

0 2

3

5

7

Tenor (years)

Source: IDX

Source: IDX

As of May 2014, there were 21 bonds outstanding in the property sector with a total value of IDR10.15 trillion and 1 bond which will mature in 2H14. Detailed information is presented in Appendix 3.

Per Mei 2014, jumlah obligasi outstanding di sektor properti sebanyak 21 obligasi dengan total nilai Rp10,15 triliun dan terdapat 1 obligasi yang akan jatuh tempo pada 2H14. Data selengkapnya dapat dilihat pada Appendix 3.

10

Property Sector Exhibit 7. Ratings and danareksa credit scores for the property sector Rating

Ticker

1Q12 2Q12

3Q12

4Q12

1Q13

2Q13 3Q13

4Q13

1Q14

Agung Podomoro Land APLN A A A A A A A A A Duta Pertiwi DUTI BBB+ Duta Anggada Realty DART A- A- ASummarecon Agung SMRA A A+ A+ A+ A+ A+ A+ A+ Bakrieland Development ELTY BBB+ BBB BB B CCC Alam Sutera Realty ASRI A A A A Bumi Serpong Damai BSDE A+ A+ A+ A+ AA- AA- AA- AAModernland Realty MDLN A- A- A- A- A- A- APerdana Gapuraprima GPRA BBB+ BBB+ BBB+ BBB+ Surya Semesta Internusa SSIA A A A A A A A Intiland Development DILD A A A A Nusa Konstruksi Enjiniring DGIK Credit Score Ticker 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Agung Podomoro Land Duta Pertiwi Duta Anggada Realty Summarecon Agung Bakrieland Development Alam Sutera Realty Bumi Serpong Damai Modernland Realty Perdana Gapuraprima Surya Semesta Internusa Intiland Development Nusa Konstruksi Enjiniring

APLN 11.50 12.77 12.68 12.33 12.44 12.98 13.32 12.54 13.32 DUTI 12.97 14.60 14.40 11.74 10.24 15.65 15.55 14.09 13.01 DART N/A N/A N/A 14.10 14.06 13.84 13.63 13.75 14.51 SMRA 11.31 13.14 12.81 14.38 14.19 13.93 13.98 13.66 15.19 ELTY 11.70 12.81 12.21 10.62 11.08 11.63 12.34 13.91 14.84 ASRI 12.27 13.25 13.35 14.52 12.78 13.60 13.71 14.38 13.92 BSDE 7.31 12.58 12.24 12.63 12.54 12.70 13.06 13.98 14.08 MDLN 8.48 12.18 11.49 11.07 11.87 13.57 13.03 14.19 14.36 GPRA 8.37 13.27 12.60 13.36 12.05 13.04 13.19 11.49 11.88 SSIA 12.60 12.78 13.71 13.53 12.80 13.66 13.92 13.14 14.06 DILD 9.10 12.62 12.23 11.94 11.98 12.81 12.61 12.39 12.62 DGIK 10.11 13.88 12.83 12.32 12.86 13.00 13.07 13.27 16.43

Source: Pefindo, Bloomberg, Danareksa Estimates Relatively stable rating and credit score As of March 2014, there were 12 bond issuers in property sector. Since 2012, 8 companies have successfully maintained their rating, 2 companies have seen upgrades and 1 company has received a downgrade. Looking at the credit scores, most of them have seen an improvement. From the 12 companies, 8 companies are investment grade with ratings ranging from A- to AAA and credit scores in the safe zone ranging from 12 to 18. The other bonds are non-investment grade with ratings below A- and credit scores below 11.99. This data shows that the majority of bond issuers in this sector have been capable of maintaining their performance despite facing an unfavourable business environment.

Rating dan credit score yang relatif stabil Per Maret 2014, terdapat 12 perusahaan emiten obligasi di sektor properti. Sejak tahun 2012, terdapat 8 perusahaan yang berhasil mempertahankan ratingnya, 2 perusahaan dengan rating yang meningkat, dan 1 perusahaan yang mengalami penurunan rating. Sedangkan jika dilihat dari credit score, sebagian besar mengalami peningkatan nilai. Dari 12 emiten ini, 8 diantaranya berada dalam Investment Grade dengan rating pada level A- sampai AAA dan nilai credit score 12 – 18 yang berada pada zona aman. Selebihnya berada pada Non Investment Grade dengan rating di bawah A- dan nilai credit score di bawah 11,99. Data ini menunjukkan bahwa sebagian besar emiten di sektor properti mampu mempertahankan kinerja dalam menghadapi lingkungan usaha yang kurang kondusif.

11

Property Sector Exhibit 8. Rating and danareksa credit score plot for the property sector 18

DGIK*

16

ELTY*

DART MDLN

14

DUTI*

12

APLN

SMRA BSDE

DILD

GPRA

10

SSIA ASRI

8 6 4

AAA

AA+

AA

AA-

A+

A

A-

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

CCC

SD

D

0

B-

2

Source: Pefindo, Bloomberg, Danareksa Estimates *using the last rating for currently non-rating company

We have constructed a graph which depicts the relationship between the rating and credit score for the 12 bond issuers a depicted in Exhibit 8. The 45° line in the middle of the chart represents the company’s fair value.The graph shows that almost all the companies have ratings which are lower than their credit scores, except DILD which is valued at fair value while BSDE has a rating higher than its credit score. A rating lower than the credit score implies less bright business prospects and limited room for the company to develop its business. By contrast, a rating higher than the credit score suggests good business prospects and optimism toward the company’s future expansion.

Exhibit 8 memetakan hubungan antara rating dan credit score dari 12 perusahaan tersebut. Garis 45 derajat di tengah area grafik merupakan nilai wajar (fair value) rating yang sesuai dengan perusahaan. Dari gambar terlihat bahwa hampir semua perusahaan mempunyai rating yang lebih rendah dari nilai credit score, kecuali DILD yang berada pada nilai wajarnya dan BSDE dengan rating yang lebih tinggi dari credit scorenya. Rating yang lebih rendah dibandingkan credit score menunjukkan prospek bisnis perusahaan yang dinilai kurang kondusif dan sifat bisnis perusahaan dengan ruang perkembangan yang terbatas. Sebaliknya, rating yang lebih tinggi dari credit score menandakan prospek bisnis perusahaan yang baik dan optimisme atas ekspansi perusahaan.

BSDE: Still Going Strong Improving performance After obtaining an A+ rating - which lasted from 2Q12 until 1Q13 – BSDE’s rating was upgraded to AA- in 2Q13. As depicted in Exhibit 9, BSDE’s rating and credit score have moved in line with each other with the company’s rating consistently higher than its credit score. This implies a good business profile, stable performance and significant opportunities to expand in the coming years. BSDE’s ability in overcoming challenges in 2013 reflected by net income of IDR2.91 trillion in 2013, up 96.48% from IDR1.48 trillion in 2012. As of December 2013, BSDE had 40.69 million m2 of land bank worth IDR7.25 trillion.

Peningkatan kinerja perusahaan BSDE mendapatkan rating A+ sejak 2Q12 sampai 1Q13, kemudian diupgrade menjadi AA- di 2Q13. Seperti yang tergambar pada Exhibit 9, BSDE memiliki pergerakan rating dan credit score yang sejalan dimana rating perusahaan secara konsisten lebih tinggi dari credit score. Rating yang lebih unggul dari credit score menunjukkan profil usaha yang baik, kinerja yang stabil dan besarnya peluang untuk mengembangkan bisnis di masa yang akan datang. Keberhasilan BSDE dalam menghadapi tantangan di tahun 2013 tercermin dari meningkatnya laba bersih menjadi Rp2,91 triliun, meningkat 96,48% dari Rp1,48 triliun di tahun 2012. Per Desember 2013, BSDE mempunyai land bank seluas 40,69 juta m2 bernilai Rp7,25 triliun.

12

Property Sector Exhibit 9. BSDE ratings and credit score 18

2.5

16

A+

A+

A+

A+

AA-

AA-

AA-

AA2

14 12

1.5

10 8

1

6 4

0.5



Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

0

1Q10

2 0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates Relatively low debt to equity ratio BSDE has a low debt to equity ratio (<0.5x) which has always been below the industry average, implying that the company reliance on debt is relatively small compare to other similar companies. In 1Q14, this ratio was little changed from its level in 4Q13, standing at around 0.31x.

Rasio debt to equity yang rendah BSDE mempunyai rasio debt to equity yang rendah (<0,5x) dan selalu berada di bawah rata-rata industri. Dengan kata lain, proporsi penggunaan hutang oleh perusahaan relatif kecil jika dibandingkan dengan perusahaan sejenis lainnya. Pada 1Q14, rasio ini tidak mengalami perubahan signifikan dibandingkan 4Q13 dan masih berada di angka 0,31x.

Exhibit 10. BSDE financial highlights

Exhibit 11. BSDE bonds recent issuance


2012 3,728 969 1,412 1,479 16,757 6,225 10,532

2013 5,741 1,256 2,910 2,906 22,572 9,157 13,415

change 54% 30% 106% 96% 35% 47% 27%

Source: Company

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) BSDE01CN2

5-Jun-13 5-Jun-18 idAA-

5 8.375 1,750

Source: IDX

SMRA: Positive Growth Chasing the opportunities As seen in Exhibit 12, SMRA enjoyed two rating upgrades in the period from 2010 until 1Q14. The first ratings upgrade was made in 2Q10 (to A from previously A-) and in the second upgrade the ratings were raised to A+ in 2Q12. The rating and credit score have moved in line with each other with the company’s rating higher than the credit score for most of the period. This suggests solid business development potential. The improving performance could be seen from net income which rose by 38% from IDR792 billion to IDR1.09 trillion. Total assets grew by 26% to IDR13.67 trillion, underpinned by a growing land bank whose value rose by IDR1.3 trillion to IDR2.9 trillion which made the company owned 13.14 million m2 of land bank by the end of December 2013.

Memanfaatkan kesempatan Seperti yang terlihat pada Exhibit 12, SMRA mengalami 2 kali kenaikan rating sejak tahun 2010 sampai 1Q14. Upgrade rating pertama terjadi pada 2Q10 menjadi A dari sebelumnya A- dan selanjutnya menjadi A+ di 2Q12 yang bertahan sampai saat ini. Rating dan credit score perusahaan memiliki pergerakan yang searah dimana rating lebih tinggi dari credit score pada sebagian besar periode. Hal ini menunjukkan optimisme terhadap potensi pengembangan bisnis perusahaan. Peningkatan kinerja ini dapat terlihat dari meningkatnya laba bersih perusahaan sebesar 38% dari Rp 792 miliar menjadi Rp1,09 triliun. Total asset perusahaan juga meningkat 26% menjadi Rp13,67 triliun, antara lain disebabkan oleh meningkatnya land bank perusahaan sebesar Rp1,3 triliun menjadi Rp2,9 triliun sehingga total land bank SMRA per Desember 2013 seluas 13,14 juta m2. 13

Property Sector Exhibit 12. SMRA ratings and credit score 18

2.5

16 14

A

A-

A

A

A

A

A

A

A

A+

A+

A+

A+

A+

A+

A+

2

12 1.5

10 8

1

6 4

0.5



Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

0

1Q10

2 0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates Manageable debt SMRA’s debt to equity ratio was above the industry average throughout most of the period, indicating that the company relied more on debt than other similar companies. Its debt to equity ratio increased to 0.54x at the end of 2013 from 0.29x in 2012. Bonds issuance and an increase in loans from banks and financing institutions were factors behind the higher ratio.

Hutang yang terkendali Rasio debt to equity perusahaan berada di atas rata-rata rasio industri pada sebagian besar periode, menunjukkan bahwa SMRA menggunakan lebih banyak hutang dibandingkan perusahaan sejenis lainnya. Rasio ini meningkat menjadi 0,54x di tahun 2013 dibandingkan 0,29x di tahun 2012. Peningkatan ini antara lain disebabkan oleh meningkatnya hutang perusahaan melalui penerbitan obligasi dan bertambahnya hutang bank dan lembaga pembiayaan.

Exhibit 13. SMRA financial highlights

Exhibit 14. SMRA bonds recent issuance


2012

2013

change

3,463 (581) 1,011 792 10,876 7,061 3,815

4,094 (803) 1,347 1,096 13,659 9,001 4,658

18% 38% 33% 38% 26% 27% 22%

Source: Company

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) SISMRA01CN1 11-Dec-13 11-Dec-18 idA+(sy) SMRA01CN1 11-Dec-13 11-Dec-18 idA+

5 10.85 150 5 10.85 450

Source: IDX

APLN: Intact Growth Challenges overcame APLN’s bonds have been rated A since 3Q11. Looking at Exhibit 15, we can see that the credit score has steadily increased to around 12 - 13, or the same level as its rating. Since the credit score has slowly approached the rating, APLN looks to be performing better. This is reflected in the smaller gap between the rating and the credit score since 2Q12. In 2013, net income rose by 11% to IDR930 billion. On the balance sheet, the company’s total assets increased by 30%, partly due to higher real estate inventory in both current assets and noncurrent assets.

Tantangan teratasi APLN mendapatkan rating A sejak 3Q11. Dari Exhibit 15, dapat terlihat bahwa credit score perlahan-lahan meningkat dan akhirnya stabil di angka 12 - 13 yang merupakan tingkat yang sama dengan ratingnya. Nilai credit score yang perlahan mendekati rating menunjukkan bahwa APLN mulai mengoptimalkan kesempatan dan sumber daya untuk memaksimalkan kinerja perusahaan, tercermin dari kecilnya gap antara rating dan credit score sejak 2Q12. Di tahun 2013, APLN berhasil meningkatkan laba bersih 11% menjadi Rp930 miliar. Dari sisi neraca, total aset perusahaan meningkat 30%, antara lain disebabkan oleh meningkatnya persediaan real estate baik pada aset lancar maupun aset tidak lancar. 14

Property Sector Exhibit 15. APLN ratings and credit score 18

2.5

16 A

14

A

A

A

A

A

A

A

A

A

A

2

12 1.5

10 8

1

6 4

0.5



Rating (LHS)

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

0

1Q10

2 0

Credit Score (LHS)

Source: Pefindo, Bloomberg, Danareksa Estimates DER: managed below 1x APLN’s debt to equity ratio is low at less than 1x but relatively high compared to the industry (less than 0.5x). This ratio reached its peak at 0.9x in 1Q12. Nevertheless, the company’s debt to equity ratio still stands far below its maximum permitted level in loan agreement of 2.7x.

DER: terjaga di bawah 1x APLN mempunyai rasio debt to equity yang rendah dengan nilai di bawah 1x, namun tergolong tinggi jika dibandingkan dengan rasio industri (di bawah 0.5x). Rasio ini mencapai angka tertinggi sebesar 0.9x pada 1Q12. Namun demikian, rasio debt to equity perusahaan masih jauh di bawah batas maksimum yang diperbolehkan dalam perjanjian pinjaman sebesar 2.7x.

Exhibit 16. APLN financial highlights

Exhibit 17. APLN bonds recent issuance

Revenue Operating Expense Operating Income Net Income Total Assets Total Liabilities Total Equity Source: Company

2012

2013

change

4,689 (608) 1,476 841 15,196 8,847 6,349

4,901 (700) 1,654 930 19,680 12,467 7,213

5% 15% 12% 11% 30% 41% 14%

Bond Issue Mature Rating Tenor Coupon Pair ID Date Date (%) Value (IDR bn) APLN01CN2 6-Jun-14 6-Jun-19 APLN01CN1 27-Jun-13 27-Jun-18

idA idA

5 12.25 750 5 9.25 1,200

Source: IDX

15

Appendices Appendix 1. Outstanding bonds in the infrastructure sector Bond ID Bond Name Issue Date Mature Date Rating Tenor Coupon (%) Par Value (IDRbn) PRTL01 TBIG01BCN1 TBIG01ACN1 SIPPLN01BCN2 SIPPLN01ACN2 PPLN01BCN2 PPLN01ACN2 JSMR01CCN1S JSMR01BCN1S JSMR01ACN1S SIPPLN01CN1 PPLN01BCN1 PPLN01ACN1 PTHK01C PTHK01B PTHK01A PTPP01CN1 ADHISM1CN2 ADHI01BCN2 ADHI01ACN2 SISSMM01 SSMM01B SSMM01A ADHISM1CN1 ADHI01BCN1 ADHI01ACN1

Obligasi Protelindo I Tahun 2014 Obligasi Berkelanjutan I Tower Bersama Infrastructure Tahap I Tahun 2013 Seri B Obligasi Berkelanjutan I Tower Bersama Infrastructure Tahap I Tahun 2013 Seri A Sukuk Ijarah Berkelanjutan I PLN Tahap II Tahun 2013 Seri B Sukuk Ijarah Berkelanjutan I PLN Tahap II Tahun 2013 Seri A Obligasi Berkelanjutan I PLN Tahap II Tahun 2013 Seri B Obligasi Berkelanjutan I PLN Tahap II Tahun 2013 Seri A Obligasi Berkelanjutan I Jasa Marga Tahap I Tahun 2013 Seri S Seri C Obligasi Berkelanjutan I Jasa Marga Tahap I Tahun 2013 Seri S Seri B Obligasi Berkelanjutan I Jasa Marga Tahap I Tahun 2013 Seri S Seri A Sukuk Berkelanjutan I PLN Tahap I Tahun 2013 Obligasi Berkelanjutan I PLN Tahap I 2013 Seri B Obligasi Berkelanjutan I PLN Tahap I 2013 Seri A Obligasi I Hutama Karya Tahun 2013 Seri C Obligasi I Hutama Karya Tahun 2013 Seri B Obligasi I Hutama Karya Tahun 2013 Seri A Obligasi Berkelanjutan I PP Tahap I Tahun 2013 Sukuk Mudharabah Berkelanjutan I ADHI Tahap II Tahun 2013 Obligasi Berkelanjutan I ADHI Tahap II Tahun 2013 Seri B Obligasi Berkelanjutan I ADHI Tahap II Tahun 2013 Seri A Sukuk Ijarah Sumberdaya Sewatama I Tahun 2012 Obligasi Sumberdaya Sewatama I Tahun 2012 Seri B Obligasi Sumberdaya Sewatama I Tahun 2012 Seri A Sukuk Mudharabah Berkelanjutan I ADHI Tahap I Tahun 2012 Obligasi Bekelanjutan I ADHI Tahap I Tahun 2012 Seri B Obligasi Bekelanjutan I ADHI Tahap I Tahun 2012 Seri A

28-Feb-14 12-Dec-13

28-Feb-17 12-Dec-16

AA-(idn) AA-(idn)

3 3

10.5 10

1,000 190

12-Dec-13

22-Dec-14

AA-(idn)

1

9

550

10-Dec-13

10-Dec-23 idAAA(sy)

10

9.6

108

10-Dec-13

10-Dec-18 idAAA(sy)

5

9

321

10-Dec-13

10-Dec-23

idAAA

10

9.6

651

10-Dec-13

10-Dec-18

idAAA

5

9

593

27-Sep-13

27-Sep-18

idAA

5

8.9

1,000

27-Sep-13

27-Sep-16

idAA

3

8.7

400

27-Sep-13

2-Oct-14

idAA

1

8.4

700

5-Jul-13 5-Jul-13 5-Jul-13 28-Jun-13 28-Jun-13 28-Jun-13 19-Mar-13 15-Mar-13

5-Jul-20 5-Jul-23 5-Jul-20 28-Jun-20 28-Jun-18 28-Jun-16 19-Mar-18 15-Mar-18

idAAA idAAA idAAA idA- idA- idA- idA- idA(sy)

7 10 7 7 5 3 5 5

8 8.25 8 9.5 9.1 8.75 8.375 8.1

121 697 182 325 290 135 700 125

15-Mar-13

15-Mar-20

idA

7

8.5

500

15-Mar-13

15-Mar-18

idA

5

8.1

125

30-Nov-12

30-Nov-17

idA(sy)

5

9.6

200

30-Nov-12

30-Nov-17

idA

5

9.6

581

30-Nov-12

30-Nov-15

idA

3

8.6

219

3-Jul-12

3-Jul-17

idA(sy)

5

0

125

3-Jul-12

3-Jul-19

idA

7

9.8

250

3-Jul-12

3-Jul-17

idA

5

9.35

375

16

Appendices Appendix 2. Outstanding bonds in the infrastructure sector (cont’d) Bond ID Bond Name Issue Date Mature Date Rating Tenor Coupon (%) Par Value (IDRbn) WSKT02B WSKT02A JMPD14JM10 SIKPPLN04B SIKPPLN04A PPLN12B PPLN12A SIKPPLN03B SIKPPLN03A PPLN11B PPLN11A SIKPPLN02B PPLN10B AIRJ01C SIKPPLN01 PPLN09B PPLN09A JMPD13R JMPD12Q PPLN08C PPLN08B PPLN08A PPLN07

Obligasi II Waskita Karya Tahun 2012 Seri B 5-Jun-12 5-Jun-17 idA- 5 9.75 Obligasi II Waskita Karya Tahun 2012 Seri A 5-Jun-12 5-Jun-15 idA- 3 8.75 Obligasi Jasa Marga XIV Seri JM-10 12-Oct-10 12-Oct-20 idAA 10 9.35 Sukuk Ijarah PLN V Tahun 2010 Seri B 8-Jul-10 8-Jul-22 idAA+(sy) 12 10.4 Sukuk Ijarah PLN V Tahun 2010 Seri A 8-Jul-10 8-Jul-15 idAA+(sy) 5 9.7 Obligasi PLN XII Tahun 2010 Seri B 8-Jul-10 8-Jul-22 idAA+ 12 10.4 Obligasi PLN XII Tahun 2010 Seri A 8-Jul-10 8-Jul-15 idAA+ 5 9.7 Sukuk Ijarah PLN IV Tahun 2010 Seri B 12-Jan-10 12-Jan-20 idAA+(sy) 10 12.55 Sukuk Ijarah PLN IV Tahun 2010 Seri A 12-Jan-10 12-Jan-17 idAA+(sy) 7 11.95 Obligasi PLN XI Tahun 2010 Seri B 12-Jan-10 12-Jan-20 idAA+ 10 12.55 Obligasi PLN XI Tahun 2010 Seri A 12-Jan-10 12-Jan-17 idAA+ 7 11.95 Sukuk Ijarah PLN III Tahun 2009 Seri B 9-Jan-09 9-Jan-16 AA- 7 15 Obligasi PLN X Tahun 2009 Seri B 9-Jan-09 9-Jan-16 AA- 7 15 Obligasi TPJ I Tahun 2008 Seri C 13-Mar-08 13-Mar-15 A(idn) 7 13.25 Sukuk Ijarah PLN II Tahun 2007 10-Jul-07 10-Jul-17 idAA+(sy) 10 10.4 Obligasi PLN IX Tahun 2007 Seri B 10-Jul-07 10-Jul-22 idAA+ 15 12.25 Obligasi PLN IX Tahun 2007 Seri A 10-Jul-07 10-Jul-17 idAA+ 10 10.4 Jasa Marga XIII Seri R Tahun 2007 21-Jun-07 21-Jun-17 idAA 10 10.25 Jasa Marga XII Seri Q Tahun 2006 6-Jul-06 6-Jul-16 idAA 10 13.5 Syariah Ijarah PLN I Tahun 2006 21-Jun-06 21-Jun-16 idAA+(sy) 10 13.6 PLN VIII Tahun 2006 Seri B 21-Jun-06 21-Jun-21 idAA+ 15 13.75 PLN VIII Tahun 2006 Seri A 21-Jun-06 21-Jun-16 idAA+ 10 13.6 PPLN VII Tahun 2004 11-Nov-04 11-Nov-14 idAA+ 10 12.25 Total

675 75 1,000 340 160 1,855 645 167 130 1,783 920 467 425 368 300 1,200 1,500 1,500 1,000 200 865 1,335 1,500 28,873

Source: IDX

17

Appendices Appendix 3. Outstanding bonds in the property sector Bond ID APLN01CN2 CTRR01C CTRR01B CTRR01A SISMRA01CN1 SMRA01CN1 DART01CN1 DILD01B DILD01A APLN01CN1 BSDE01CN2 MDLN02A MDLN02B SSIA01B SSIA01A APLN02 BSDE01CCN1 BSDE01BCN1 BSDE01ACN1 APLN01B APLN01A

Bond Name Issue Date Mature Date Rating Tenor Coupon (%) Par Value Obligasi Berkelanjutan I Agung Podomoro Land 6-Jun-14 6-Jun-19 idA 5 12.25 750,000 Tahap II Tahun 2014 Obligasi I Ciputra Residence Tahun 2014 Dengan 2-Apr-14 2-Apr-21 A(idn) 7 13 80,000 Tingkat Bunga Tetap Seri C Obligasi I Ciputra Residence Tahun 2014 2-Apr-14 2-Apr-19 A(idn) 5 12.4 220,000 Dengan Tingkat Bunga Tetap Seri B Obligasi I Ciputra Residence Tahun 2014 2-Apr-14 2-Apr-17 A(idn) 3 11.4 200,000 Dengan Tingkat Bunga Tetap Seri A Sukuk Ijarah Berkelanjutan I Summarecon 11-Dec-13 11-Dec-18 idA+(sy) 5 10.85 150,000 Agung Tahap I Tahun 2013 Obligasi Berkelanjutan I Summarecon Agung 11-Dec-13 11-Dec-18 idA+ 5 10.85 450,000 Tahap I Tahun 2013 Obligasi Berkelanjutan I Duta Anggada Realty 8-Oct-13 8-Oct-18 idA- 5 12.25 250,000 Tahap I Tahun 2013 Obligasi PT Intiland Development 2013 Seri B 9-Jul-13 9-Jul-18 idA 5 10 154,000 Obligasi PT Intiland Developmentn 2013 Seri A 9-Jul-13 9-Jul-16 idA 3 9.75 346,000 Obligasi Berkelanjutan I Agung Podomoro 27-Jun-13 27-Jun-18 idA 5 9.25 1,200,000 Land Tahap I Tahun 2013 Obligasi Berkelanjutan I Bumi Serpong Damai 5-Jun-13 5-Jun-18 idAA- 5 8.375 1,750,000 Tahap II Tahun 2013 Obligasi II Modernlend Realty Tahun 2012 27-Dec-12 27-Dec-15 idA- 3 10.75 250,000 Dengan Tingkat Bunga Tetap Seri A Obligasi II Modernlend Realty Tahun 2012 27-Dec-12 27-Dec-17 idA- 5 11 250,000 Dengan Tingkat Bunga Tetap Seri B Obligasi Surya Semesta Internusa I 2012 Seri B 6-Nov-12 6-Nov-17 idA 5 9.3 550,000 Obligasi Surya Semesta Internusa I 2012 Seri A 6-Nov-12 6-Nov-15 idA 3 8.3 150,000 Obligasi II Agung Podomoro Tahun 2012 15-Aug-12 15-Aug-17 idA 5 9.375 1,200,000 Obligasi Berkelanjutan I Bumi Serpong 4-Jul-12 4-Jul-19 idA+ 7 9.5 436,000 Damai Tahap I Tahun 2012 Seri C Obligasi Berkelanjutan I Bumi Serpong 4-Jul-12 4-Jul-17 idA+ 5 9.25 479,000 Damai Tahap I Tahun 2012 Seri B Obligasi Berkelanjutan I Bumi Serpong 4-Jul-12 4-Jul-15 idA+ 3 8 85,000 Damai Tahap I Tahun 2012 Seri A Obligasi I Agung Podomoro Land 2011 Seri B 25-Aug-11 25-Aug-16 idA 5 11 875,000 Obligasi I Agung Podomoro Land 2011 Seri A 25-Aug-11 25-Aug-14 idA 3 10 325,000 Total 10,150,000

Source: IDX

18

Appendices Appendix 4. Danareksa credit score: a closer look Danareksa Credit Score (DCS) is a quantitative measurement method to ascertain the creditworthiness of a company by undertaking statistical analysis of the company’s financial indicators. Some of these financial indicators are revenues, total assets, working capital, retained earnings, and cash flow from operations. The model uses quarterly data since 2007. As of June 2014, 128 companies were included in developing the DCS model.

Danareksa Credit Score (DCS) merupakan metode penilaian kuantitatif untuk mengetahui creditworthiness suatu perusahaan melalui analisa statistik atas indikator-indikator keuangan perusahaan tersebut. Indikator keuangan yang digunakan untuk membangun model DCS antara lain pendapatan, total aset, modal kerja, laba ditahan, dan arus kas dari operasi. Model ini menggunakan data kuartal tiap perusahaan sejak tahun 2007. Per Juni 2014, terdapat 128 perusahaan non keuangan di Indonesia yang digunakan dalam membangun model DCS.

To develop a reliable credit score model which can be applied to all the companies listed on the Indonesian Stock Exchange (BEI) and to companies that have issued corporate bonds, a benchmark is needed to measure the suitability of the model in comparison to the company’s position in the market as shown by its rating. DCS uses the rating from PT Pemeringkat Efek Indonesia (Pefindo) as the main parameter. The credit score ranges from 0 – 18, whereby each value corresponds to a particular Pefindo rating, as depicted in the table below:

Untuk mendapatkan model credit score handal yang dapat diaplikasikan terhadap setiap perusahan yang tercatat di Bursa Efek Indonesia (BEI) dan perusahaan yang telah menerbitkan obligasi korporasi, diperlukan suatu parameter utama untuk mengukur kesesuaian model dengan posisi perusahaan di dalam pasar yang dicerminkan oleh ratingnya. DCS menggunakan rating dari PT Pemeringkat Efek Indonesia (Pefindo) sebagai parameter utama. Dalam model ini dilakukan numerisasi credit score dengan nilal yang berkisar antara 0-18 dimana tiap-tiap nilai tersebut mencerminkan kesetaraan dengan tingkat rating tertentu dari Pefindo, seperti yang tergambar pada tabel berikut:

Safe Zone

Distress Zone

Grey Zone

Credit Score

Rating

Credit Score

Rating

Credit Score

Rating

= 18 17.00 - 17.99 16.00 - 16.99 15.00 - 15.99 14.00 - 14.99 13.00 - 13.99 12.00 - 12.99

AAA AA+ AA AA- A+ A A-

11.00 - 11.99 10.00 - 10.99 9.00 - 9.99 8.00 - 8.99 7.00 - 7.99 6.00 - 6.99

BBB+ BBB BBB- BB+ BB BB-

5.00 - 5.99 4.00 - 4.99 3.00 - 3.99 2.00 - 2.99 1.00 - 1.99 0 - 0.99

B+ B B- CCC SD D

Each credit score falls into one of three investment zones. The safe zone is for companies with credit scores ranging from 12 – 18, depicting companies with low default risk and a high probability of fulfilling all their obligations, including making principal and coupon payments on the bonds. The grey zone covers credit scores ranging from 6 – 11.99, depicting companies with moderate to high default risk. As for the distress zone, the credit score ranges from 0 – 5.99 and depicts companies with extremely high default risk with a high probability that the company is not able to meet its obligations which includes making principal and coupon payments.

Hasil credit score yang didapatkan akan dikelompokkan menjadi 3 zona investasi. Safe zone dikategorikan untuk perusahaan dengan credit score antara 12 - 18, merepresentasikan perusahaan dengan risiko gagal bayar yang rendah dan memiliki probabilita tinggi untuk memenuhi semua kewajiban obligasinya berupa pokok dan kupon. Grey zone diperuntukkan perusahaan dengan credit score antara 6 - 11.99, mewakili perusahaan dengan risiko gagal bayar yang moderat dan tinggi. Sedangkan Distress zone untuk perusahaan dengan credit score antara 0 – 5.99 yang menggambarkan perusahaan dengan risiko gagal bayar sangat tinggi dengan probabilita yang juga tinggi bahwa perusahaan tidak dapat memenuhi kewajiban obligasi, baik pokok maupun kuponnya.

19

DEBT RESEARCH TEAM Telp No. Fax No.

+62-21-29555777 +62-21-3501709

Head of Debt Research Yudistira Slamet [email protected] ext. 3400 Credit Analyst Production & Database Management Amir A. Dalimunthe Eka Nuraini [email protected] ext. 3405 [email protected] ext. 3407 Ayesha Ardelia [email protected] ext. 3406 Market Analyst Melissa Hartono Rifki Rizal [email protected] ext. 3402 [email protected] ext. 3404 DEBT CAPITAL MARKET TEAM Telp No. Fax No. Head of Debt Capital Market Budi Susanto [email protected]

+62-21-29555777 +62-21-3501724/25

ext. 3200

Debt Sales & Brokerage Debt Trading & Investment Rina Rimawati D Romi Mulyadi [email protected] ext. 3223 [email protected] Agung Suprihanto Indra Figrachanda [email protected] ext. 3212 [email protected] Putrika Mayadipta [email protected] ext. 3215 Ariningtyas W. Agustina [email protected] ext. 3224 Product & Retail Hernita Dwi Ariesandhy Setyo H. Purnomo [email protected] ext. 3216 [email protected]

ext. 3213

ext. 3226

20

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21

Danareksa Credit Score Infrastructure and Property Sector

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