Daily Brief Credit: Pakuwon Jati – Tear Sheet – Lucror Analytics and more

We view Pakuwon Jati (PWON) as “Low Risk” on the LARA scale, on account of the company’s prudent financial policy in recent years, strong balance sheet, good access to capital and track record of achieving growth amid challenging market conditions. PWON has strong credit metrics compared to Indonesian peers, and it has withstood the downturn in Indonesian real estate. We like the company’s high share of recurring income (slightly more than half of group revenues) and diversified property portfolio (spanning the residential, retail, office and hotel segments), which mitigate its history of debt restructuring. The key risk is a change in consumer behaviour, which might result in low mall traffic long after COVID-19 related lockdowns have ended.

Our fundamental Credit Bias is “Stable”, as the robust balance sheet should help PWON weather economic downturns.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”. The real estate industry is not exposed to many of the ESG risks common in other sectors.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Central China Securities
• Sunac China Holdings