Ratings agency says Pelindo II’s stable credit rating is supported by its “market leading position in Indonesia’s container port industry.
Fitch Ratings has affirmed Indonesia-based port operator PT Pelabuhan Indonesia II (Persero)’s (Pelindo II) Long-Term Foreign-Currency Issuer Default Rating (IDR) at ’BBB’. Fitch has also affirmed Pelindo II’s senior unsecured rating and senior unsecured notes at ’BBB’.
Fitch said the ratings are supported by Pelindo II’s “market-leading position in Indonesia’s container port industry, the strategic location of its flagship Tanjung Priok port as well as the long-term maturity of its concessions, which ensures visibility of group cash-flow generation. Pelindo II also benefits from stable rental income from its joint ventures (JV) under a landlord-tenant model, despite moderate flexibility in modifying tariffs. Pelindo II’s Fitch-adjusted net debt/EBITDAR is forecast at an average of 3.9x in our rating case.”
Fitch noted that Pelindo II is a state-owned company and can expect state support when required, but its port business is in a strong operating position without any extra state support. “Its flagship port, Tanjung Priok, is the gateway port to Jakarta, accounting for more than 48% of container throughput in Indonesia. Pelindo II has a dominant container market share with limited competition and minimal transhipment cargo. The concessions for most of its ports have 50-year terms, ending in 2065”.
Pelindo II derives more than 50% of its EBITDA from fixed rental income from its joint ventures. In container terminals, its tariffs are commercially negotiated, but subject to consultation with the Ministry of Transport. “This limits the company’s pricing flexibility, as demonstrated by flat tariffs for its international containers over the past few years. However, tariffs on domestic containers have been increasing. The tariff structure, once fixed, will remain valid for at least two years,” Fitch said.
In terms of future growth, the utilisation rate at Tanjung Priok (including the New Priok Container Terminal NPCT 1) remains “remains elevated”, Fitch said. Pelindo II is now constructing NPCT2 and NPCT3 as well as developing Kijing Port to support the economic growth of Kalimantan. Fitch forecasts total capex of IDR26 trillion (approximately US$1.8 billion) up to 2025, which it expects Pelindo II can fund from its operating cash flow while allowing for dividend distribution.