Agung Podomoro Has Robust Footing Despite Reclamation Problem: Moody's
Jakarta. Listed property developer Agung Podomoro Land for the first time received debt rating from rating agency Moody's Investors Services on Monday (22/05), which reflects the company's established position in Indonesia's property sector despite uncertainty of its project on Jakarta's reclaimed land.
Moody's rates Agung Podomoro at Ba3 or three notches below investment grade with a stable outlook. The property developer's proposed dollar-denominated bonds — to be issued by its Singapore-based subsidiary APL Realty Holdings — also received the same rating.
In comparison, Moody's rates Lippo Karawaci, Indonesia's largest property company, at Ba3 with a negative outlook. Rival Alam Sutra Realty is at lower speculative level of B2 with a stable outlook.
"[Agung Podomoro] is well-diversified across multiple projects and property segments, and successfully caters to customers across the price spectrum," Moody's vice president and senior analyst Jacintha Poh said in a statement.
Moody's projects Agung Podomoro to achieve around Rp 5 trillion ($376 million) in marketing sales, or sales of property that has yet to be built. The major contributor to the marketing sales is Podomoro Industrial Park at Rp 1.6 trillion.
In the past decade Agung Podomoro has built apartments, trade centers, shopping malls, office towers and hotels in Jakarta and in second-tier locations locations such as Bogor , Karawang and Bandung in West Java, Bali, Batam in Riau Islands, and Balikpapan in East Kalimantan.
Poh said that Agung Podomoro's portfolio of investment property — the one that generate rents — is growing and provides healthy operating recurring income.
Over the next 12-18 months, Moody's expects Agung Podomoro's revenue from investment properties to grow by around 10 percent and contribute to 25-30 percent of the company's total revenue — 35-40 of earning before interest, tax, depreciation and amortization (EBITDA).
Last year, investment properties contributed 27 percent to the total revenue and 43 percent to the reported EBITDA.
The recurring income should help mitigate "the effects of the lumpy cash flows from its property development business."
One of Agung Podomoro's property development businesses is a reclamation project in North Jakarta, the future of which is now uncertain as it was suspended in May 2016.
Prior to the suspension, Agung Podomoro was developing a 161-hectare G Island project, dubbed as Pluit City. It was the first of the company's concessions for three islands of around 550 hectares.
"Given uncertainty over when the suspension will end, Moody's base case scenario incorporates only maintenance costs relating to the project and the absence of cash flow contributions," the agency said.
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