Summarecon, A Property Developer Owned By Conglomerate Soetjipto Nagaria, Is Projected To Be Better, Pefindo Raises SMRA's Rating From A To A+
JAKARTA - The financial performance of a conglomerate-owned property developer Soetjipto Nagaria, PT Summarecon Agung Tbk (SMRA) is projected to be better this year. This will certainly trigger an increase in indicators of financial leverage and cash flow of the company.
The Indonesian Securities Rating Agency (Pefindo) has also upgraded Summarecon Agung's rating from A to A+ with a stable outlook. The debt rating upgrade also applies to the Shelf-Registered Bond III issued by Summarecon Agung.
Pefindo analysts Marshall Tatuhas and Yogie Perdana said that the increase in SMRA's rating reflects Pefindo's assessment that SMRA will maintain its strong financial profile.
"Particularly the improvement in financial leverage and cash flow indicators triggered by better earnings projections", Marshall and Yogie said in an official statement, quoted Tuesday, April 5.
Pefindo assesses that Summarecon's future source of revenue will come from pre-sales in existing areas, especially in Bogor and Serpong, and the development of future areas. This includes increased revenue in the shopping center and hotel segments.
The A+ rating for Summarecon reflects SMRA's strong market position in the property industry, good asset quality, and moderate recurring income. However, SMRA's rating is constrained by the risk of developing new projects in new areas and the nature of the property industry which is sensitive to changes in macroeconomic conditions.
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Pefindo will raise SMRA's rating if the company consistently achieves its pre-sales, revenue, and EBITDA targets with a debt ratio that remains conservative.
On the other hand, Pefindo can lower its SMRA rating if the company posts lower pre-sales than the target and the progress of property development completion takes longer than expected, resulting in revenue recognition that does not reach the target.
"The rating could also come under pressure if the company's debt is greater than projected, resulting in a more aggressive capital structure", Marshall said.