PEFINDO affirmed the ratings for PT Duta Pertiwi Tbk. (DUTI or the Company) and its Bond IV/2003 at “_idBBB-”. The ratings reflect the Company’s strong market position in the commercial & residential sector, good asset quality and diversified portfolio. However, the ratings are mitigated by declining margins due to fiercer competition within the sector. DUTI is a diversified property developer, engaging in commercial mixed-used development, landed residential, office building and hotel. The Company is the property arm of Sinar Mas Group (SMG) and listed at the JSX since November 1994. SMG was formerly one of Indonesia’s largest and most diversified groups, engaged in several core businesses including agribusiness, pulp and paper, and property development.

The current rating evaluation reflects the following factors:

• Strong market position in the commercial & residential sector. DUTI is regarded as a top tier property developer in Indonesia. In 2003, the Company booked total sales of IDR1,209 bn, coming mostly from its property sales and recorded sales backlog amounting to IDR1,091 bn. DUTI’s strong market position in commercial and residential sector in Jakarta has also enabled the Company to successfully continue pre-sale scheme for its properties. DUTI has successfully penetrated the right niche markets in shop-houses and kiosks markets. In residential sector, DUTI has also been strongly committed to their development of unique concept and theme residential, such as world city concept i.e. Kota Wisata, Kota Bunga and Legenda Wisata. During 1H04, DUTI had acquired on hold property development “Kota Legenda” from IBRA. This project is located in Bekasi, about 22 km away East from Cawang intersection. DUTI has renamed the project to “Grand Wisata”, which will become the Company’s icon project in the future. During 2003, DUTI recorded revenues of IDR545.3 bn from commercial properties and IDR325.9 bn from residential properties attributable to commercial and residential units that have been handed over to its customers.
• Good asset quality. “ITC” (International Trade Centre) has become DUTI’s strong brand name for commercial properties, which are very popular amongst merchants, traders, and customers. This strong brand image is also supported by the prime locations of the properties such as at commercial areas of Mangga Dua, Roxy, Fatmawati, Kuningan, Cempaka Putih, Permata Hijau and Depok. As to date, DUTI had successfully sold almost all units at eight ITCs located within DUTI’s superblock complex, a mixed-used property development, namely ITC Mangga Dua, ITC Roxi Mas, ITC Cempaka Mas, ITC Fatmawati, ITC Ambasador-Kuningan, ITC Permata Hijau, ITC Depok and ITC Mangga Dua Surabaya. Meantime, in residential properties, DUTI has successfully developed residential with well-established infrastructure and public facilities at Cibubur, Puncak, Kebon Jeruk and Tangerang. To support its future growth, DUTI still has around 1,069 ha of land bank to be developed located in Jabotabek areas.
• Well-diversified portfolio. DUTI’s property portfolio is relatively well diversified in terms of location and product-types. DUTI offers a wide range of product types including shop-houses and kiosks, landed residential, apartment, office building, and hotel, both around and outside Jakarta. In terms of revenue stream, property sale is still relatively dominating the company’s revenue with average contribution of 79% in the past six years, while the remaining is coming from recurring rental income. In 2003, property sale contributed IDR880 bn to DUTI’s total operat ing income, while rental property contributed about IDR330 bn.

The above ratings are mitigated by:

• Declining margins. The Company had recorded declining margin over the years as reflected by OPBIT margin that declined to 13.1% in 1H04 from 13.5% in 2003 and 22.2% in 2002 due to fiercer competition within the sector. The declines in margins have pulled down DUTI’s profitability during the period as reflected by its ROPC that dropped to 4.4% in 1H04 from 6.5% in 2003 and 14.8% in 2002.

OUTLOOK

A “stable” outlook is assigned to the above ratings. The Company’s successful sales on its latest commercial project development, such as ITC Permata Hijau and ITC Depok should reflect the continuing strong demand for small retail outlets at strategic commercial areas. DUTI’s landed residential icon project, “Grand Wisata”, should also maintain its sales performance going forward.

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