TEXT-S&P summary: PT Astra International Tbk.

(The following statement was released by the rating agency)

Oct 22 -

===============================================================================

Summary analysis -- PT Astra International Tbk. ------------------- 22-Oct-2012

===============================================================================

CREDIT RATING: BBB-/Stable/-- Country: Indonesia

===============================================================================

Credit Rating History:

Local currency Foreign currency

11-May-2011 BBB-/-- BBB-/--

===============================================================================

Rationale

The rating on PT Astra International Tbk. reflects the company's 'bb+'

stand-alone credit profile (SACP) and a one-notch uplift because of expected

support from its parent, Jardine Strategic Holdings Ltd. (Jardine Group:

A-/Stable/--; cnAA/--). The rating also reflects our view that the company has

a "fair" business risk profile and "modest" financial risk profile.

Astra's SACP is similar to the long-term foreign currency rating on Indonesia

(BB+/Positive/B; axBBB+/axA-2). We expect Astra to have low leverage over the

next six to 18 months, excluding its captive financial services entities. Over

the same period, the company should also generate adequate foreign currency

cash flows from the commodities businesses to service its borrowings. In

addition, Astra has good capital market standing and excellent financial

flexibility, in our view. This is because many of the company's operating

companies are listed and have strong market positions and good profitability.

The SACP also factors in Astra's exposure to cyclical and economically

sensitive sectors (such as palm oil and mining contracting), increasing

competition in the automobile business, and the company's potential large

investments and high execution risk in capital-intensive segments.

The one-notch of uplift due to support from Jardine Group reflects our

assessment that Astra is strategically important to its parent, even though

the parent does not guarantee the company's financial obligations. Jardine

Group has a record of owning and closely managing its core businesses over a

long period.

In our base-case scenario, we expect Astra's borrowings (excluding financial

services) to increase in 2012-2013 to about Indonesian rupiah (IDR) 9

trillion-IDR11 trillion. As of June 30, 2012, Astra's leverage is low, with a

debt-to-EBITDA ratio of 0.5x and a ratio of funds from operations (FFO) to

debt of more than 100%, reflecting a "modest" financial risk profile,

according to our criteria. The company has increased debt to fund its capital

expenditure, but we believe its credit protection measures are more than

adequate for its SACP. We anticipate that the ratio of total debt to EBITDA

will remain below 1.5x and the FFO-to-debt ratio will exceed 60% in the next

six to 18 months. We calculated these ratios after adjusting for debt and cash

flows, based on our captive finance methodology.

Most of Astra's businesses have minimal debt, except for the heavy equipment

and mining segments that PT United Tractors Tbk. (UT: unrated) runs. UT

accounted for almost 46% of Astra's total debt as of June 30, 2012.

Astra's automotive distribution and palm oil businesses contributed almost 50%

to its pretax profit in the first six months of 2012. These businesses have

minimal debt and are cash generative, with limited capital expenditure needs.

Financial services entities contribute about 17% to operating income.

In our view, Astra's profitability and cash flows are particularly sensitive

to credit market conditions because its financing business depends on

wholesale funding to underwrite automotive sales. Nevertheless, we note that

Astra has increasingly diversified its funding sources. A simultaneous

disruption in the credit market and a slowdown in the economy could increase

credit costs and weaken the loan quality of Astra's financing business.

Nevertheless, we believe the company's management of its financial services

entities is conservative. Our view is based on Astra's practice of prudent

provisioning, its strong capital structure, and locked-in interest margins

with back-to-back matching of receivables and loan tenor. The financial

services entities' ratio of debt-to-equity is about 4.5x-5.5x, which is within

the regulator's maximum debt-to-equity ratio of 10x.

Liquidity

In our opinion, Astra's liquidity is "strong." As of June 30, 2012, the

company has a cash balance of IDR9.4 trillion (US$986 million) and undrawn

committed financing facilities of US$1.85 billion. We estimate the company's

liquidity sources will exceed uses by more than 50% in 2012, based on the

following major assumptions:

-- Astra will generate EBITDA of IDR23 trillion to IDR24 trillion (US$2.4

billion to US$2.5 billion) in 2012.

-- Astra's expenditure for 2012 will include working capital needs of

IDR5.5 trillion (US$570 million), capital expenditure of IDR16 trillion

(US$1.7 billion), and dividend distribution of IDR9.5 trillion (US$986

million).

In assessing liquidity, we have assumed that Astra will be able to renew its

short-term bank debts of IDR4.4 trillion (US$460 million) based on its record

and good relationships with banks. Cash, undrawn committed facilities, EBITDA,

capital expenditure, and short-term debts do not include those of its

financial services companies.

Outlook

The stable outlook reflects our expectation that Astra will maintain strong

cash flows and liquidity. The prospects for profitability appear reasonably

good. In our opinion, Astra will invest in expanding its business portfolio,

but will still manage the expansion within its conservative investment

framework.

We could lower the rating if Astra undertakes aggressive expansion and

acquisitions, leading to a significant change in its business and financial

risk profiles, or we assess the support from Jardine Group has weakened.

We could upgrade Astra if we raise our transfer and convertibility risk

assessment of Indonesia to 'BBB' from 'BBB-'. This would be accompanied by an

improvement in the company's business risk profile, particularly through

greater diversification and reduced concentration of profits from a particular

business segment. At the same time, Astra would maintain its "modest"

financial risk profile and its ability to weather sovereign financial stress.

Source: http://news.yahoo.com/text-p-summary-pt-astra-international-tbk-090623675--sector.html

rick santorum daughter gainesville 2012 royal rumble the grey machine gun kelly saul alinsky annapolis