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Thursday, May 5, 2011

Krakatau Steel build IDR5.92 trio blast furnace on 3rdQ

5/5/2011
Irvin Avriano A.

Krakatau Steel build IDR5.92 trio blast furnace on 3rdQ

JAKARTA: PT Krakatau Steel Tbk, a SOE listed steel manufacturer company, budgeting IDR5.92 trio to build their very first time blast furnace that expect to completed on 1st or 2nd Q/2014 after 30 months.

Based on information disclosure which published in newspaper early this morning, the company intend to start the 1.2 mio tonnes/year blast furnace project on 3rdQ this very year.

The company which shares coded KRAS also announced that they only needs funding for IDR5.16 trio from the total investment needs, related to land bank and working capital that they already have, but still stands on those budget.

The company that commandeered by Fazwar Bujang also intend to looking for export credit to funding the engineering, procurement, and construction (EPC) package as much as 85% from the total needs of IDR4.6 trio, or equal to IDR3.91 trio.

The EPC package fund needs itself also claimed still inside the potential contractor's budget range. The company also still in tender process to appoint project contractor, which still followed by two offshore contractors.

Based on the limited information, it is indicated that the foreign contractors are came from South Korea, related with their close relation with Pohang Iron & Steel Corp, a Ginseng Country steel manufacturer. Or else, they also could appoint Japanese contractor, related to Nippon Steel Corp, Mitsui Co Ltd, Nippon Steel Trading Co, and Metal One involvement on one of their listed subsidiary: PT Pelat Timah Nusantara Tbk.

But the disclosure don't explain any detail about borrowing plan, also banks' name that been approached to funding the very first project after they listed in the Indonesia Stock Exchange (IDX/Bursa Efek Indonesia).

The project Financial Internal Rate of Return (FIRR) calculated to 15.89%, with expected loan interest of 3.65%, and its weighted average cost of capital (WACC) 9.7%.

Krakatau Steel also counting the potential net profit that could gain after the project completed is IDR245.58 bio at the the end of 2014, and IDR404.42 bio on 2015.

The company also expected their COGS to revenue ratio will decline from previously 85.4%--87.7% on 2011--2015, on pre-project scenario. After the completition, the management calculate that the ratio can reduced to 84.8% on 2014 and 84.6% on 2015.

Sent from my BlackBerry® smartphone from Sinyal Bagus XL, Nyambung Teruuusss...!

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