JAKARTA - International rating agency Moody's Investor Service has cut its debt rating from property company PT Agung Podomoro Land Tbk (APLN) to Caa1 with a negative outlook (Caa1-).
In a Moody's report quoted Wednesday, July 21, APLN's Caa1 rating reflects expectations that the company's liquidity will remain weak in 2021 and 2022, as the company relies on asset sales and external funding to meet cash needs.
Agung Podomoro Land's capital structure is also unsustainable, as shown by its high leverage. APLN is expected to complete the sale of its industrial land and sale of its remaining stake in Central Park Mall in 2021.
But Moody's expects uncertainty surrounding the timely completion of the two asset sales, given the implementation of Indonesia's Emergency Public Activity Restrictions (PPKM), particularly in Java and Bali, following the spike in coronavirus (COVID-19) cases in both regions.
"We expect APLN's revenue from its investment properties to remain unchanged in 2021 from 2020, but revenue from its development business will drop significantly if asset sales are not executed. As such, APL's credit metrics will weaken over the next 12-18 months." Moody's said in its report.
For information, APLN recorded a very significant decline in revenue in the first quarter of 2021. APLN's revenue was recorded at Rp.485.44 billion, down 63 percent from the same period last year of Rp.1.32 trillion.
Meanwhile, the cost of goods sold and direct expenses were successfully reduced to Rp299.84 billion from the previous Rp772.99 billion. The company was even able to print a gross profit of Rp185.60 billion from the previous Rp548.58 billion.
However, the decline in revenue coupled with the company's expenses, along with foreign exchange losses made APLN still print a net loss. Until last March, APLN's foreign exchange loss was recorded at Rp163.69 billion, although it was successfully cut from the previous loss of exchange rate of up to Rp1.05 trillion.
APLN management, in a statement in the financial statements stated that the Indonesian government did take the PPKM policy in order to prevent the spread of the COVID-19 pandemic.
"This restriction resulted in a slowdown in global economic activity and affected the demand for goods and services. However, our operations in 2021 showed improvement compared to the previous year which was marked by increased utilization of production capacity," APLN management wrote, quoted on Wednesday, June 30.
Management has also prepared a number of necessary risk mitigation and management measures. However, the magnitude and extent of the impact of the pandemic on the company's financial condition, liquidity and future results of operations is difficult to determine.
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