Aluco intend to issue B3 US$ bond

BI/financial

25/5/2011

Irvin Avriano A.

Bisnis Indonesia

Aluco intend to issue B3 US$ bond

JAKARTA: PT Terang Kita (Tranka Kabel) parent company, PT Aluco, intends to issue US dollars denominated bond, which already pocketed B3 rating from Moody's Investors Service.

In its release today, Moody's analyst Alvin Tan assess the ratings reflect the company's leading position in the cable manufacturers segment in the country, through its subsidiary Tranka Kabel with ownership portion 79.5%, although small scale.

"Long term relationship with the company and the state electricity company PT operating a vertically integrated company. Integration of the growing efficiency and ability to produce variety of high-voltage cables and small, either regular or underground cable," says Tan in such research today.

He said the company considered to be able to capture the opportunity of potential growth in demand for cable transmission and distribution cables due to high electricity demand in the country. Aluco ability to continue the potential risk to the consumer price fluctuation is predicted to minimize the risk of the impact of commodity price changes.

According to him, it was successfully carried the company through a consistent increase in profitability, with profit margins before interest, taxes, depreciation, and amortization (EBITDA) amounted to 7% - 15% over the past 3 years.

One of the things that are considered to be the main challenge Aluco is the amount that the company needs working capital, which is limited by capacity utilization and potential for organic growth.

"The rise in aluminum and copper prices in recent years have created an increases need for working capital, which eventually resulted in low capacity utilization for cable capacity by 49% and 59.3% for 5 years."