PEFINDO
affirmed the ratings of “idA-“
for PT Jawa Pos (JAWA or the Company) and its IDR200
billion Bond I/2003. The ratings reflect the Company’s
strong presence in print media market especially in
East Java, and well-diversified vertically integrated
business. However, the ratings are mitigated by the
Company’s relatively aggressive capital structure.
JAWA is a leading integrated media company headquartered
in Surabaya, East Java. The Company’s flagship
Jawa Pos daily newspaper is distributed mostly in East
Java and Eastern Indonesia, while other media under
Jawa Pos News Network are distributed all over the country.
In addition to its media business, JAWA has businesses
in printing service, paper manufacturing, property by
renting available space at its Graha Pena building,
trading, transportation service, and electrical power
generation. As of 31 December 2004, JAWA is owned by
PT Grafiti Pers (44.67%), Mr. Dahlan Iskan (25.15%)
and some individuals with ownership less than 6% (30.18%).
The major shareholder, PT Grafiti Pers, is known as
one of the nation’s prominent publishing companies.
Supporting
factors for the above rating are:
Strong
presence in print media market especially in East
Java. JAWA has managed to maintain a
stable daily circulation of its flagship newspaper,
Jawa Pos, of over 310,000 copies, which made it have
a strong market position especially in East Java.
In Surabaya, it is believed to be the market leader
with the highest penetration level among many media
distributed in the city. The Company also continues
to show its commitment not only to the agents and
readers but also to its society especially in Surabaya
in order to maintain its strong position. Its strong
presence is also reflected by the Company’s
growing revenue especially in media business consisting
of revenue from newspaper and advertisement with a
five year CAGR of respectively 15.7% and 24.9%. It
also supports other print media to grow by sharing
news information. These media are connected under
Jawa Pos News Network (JPNN), which covers 47 newspaper
including Jawa Pos, 10 tabloids, and 3 magazines distributed
in almost all of the provinces in Indonesia. JPNN
also enters into television broadcasting industry
through JTV, which started its operation in 2001 catering
viewers especially in East Java areas. Well-diversified
vertically integrated business. The
Company’s media business is strongly supported
by its owned printing facilities and newsprint paper
manufacturer. Two printing facilities are located
in Surabaya, while six others are spread in major
cities with total current capacity of 615,000 copies/hour.
Moreover, JAWA’s newsprint paper requirements
are fully supplied by its subsidiary, PT Adiprima
Surapinta, which currently has 144,000 tpa of capacity,
in which about 46.5% of production are selfconsumed.
Apart from supporting the Company’s core business
in media, these two businesses have been able to generate
revenue from third party to the Company with increasing
contribution to total revenue during the past five
years. Both businesses recorded a five-year CAGR of
46.9% and 38.7% for paper and printing business, respectively.
In order to supply energy requirement in its paper
business, the Company also built electrical power
plant, in which its performance is still not proven
since it has still not been fully operated.
Mitigating
factor for the above rating is:
Relatively
aggressive capital structure. Despite
an improving DER figure to 1.3x in 2004 from previously
2.6x, the Company’s debt remained high at IDR640.7
billion including other payable to related parties
of IDR125.1 billion and after bond sinking fund of
IDR10.3 billion as of December 31, 2004. The improving
DER is mostly attributable to the increasing equity
as a result of the improvement in its earnings as
well as assets revaluation instead of capital injection
by shareholders or amortization of its debts. The
Company’s debt substantially increased following
the issuance of IDR200 billion bond in 2003 mostly
used for its 25 MW power plant construction. The Company
is also exposed to foreign currency fluctuation, as
it still has USD22.9 million foreign exchange debts
during 2004, while its foreign exchange revenue from
export is still low at less than 10% of its total
revenue.
OUTLOOK
A “stable”
outlook is assigned to the above ratings. PEFINDO has
incorporated JAWA’s strengthening position in
integrated media industry with the increase in paper
production capacity as well as its power plant in which
its success is still not proven.
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