PEFINDO: PT Timah Tbk (TINS) rated idA with stable outlook

(June 10, 2022)--PEFINDO has also affirmed its idA rating for TINS’s Shelf-Registered Bond (SR) I and SR Sukuk Ijarah I. The Company plans to repay the maturing SR Bond I Phase I Series B, Phase II Series A, and SR Sukuk Phase I Series B for the total amount of IDR1.05 trillion which will be due on August 15, 2022, and September 28, 2022, by using internal cash and credit facility from external. As of March 2022, it has cash of IDR2.1 trillion, as well as unused credit facilities from external IDR6.8 trillion in May 2022, sufficient to cover the maturing bond and sukuk, in our view.

The corporate rating reflects TINS’s very strong market position, vertically integrated operations, and strong cash flow protection measures and liquidity. These strengths are partly offset by its moderate financial policy, and its exposure to the volatility of tin prices.

The rating may be raised if TINS continues to demonstrate intensive deleveraging to a conservative level by conducting cost-efficiency and generating a strong EBITDA on sustain basis. The rating may be lowered if it incurs significantly higher debt than projected without being compensated by better business performance and if the fluctuation of global tin price significantly impairs its revenue and/or profitability.

Unfavorable regulatory changes such as the realization of recent government plans on ingot export ban may also potentially impair the Company’s cash flow generation and credit profile, considering the substantial revenue contribution from export market.

Founded in August 1976, TINS is a vertically integrated mining company in Indonesia focused on producing tin ingots. Its main mining operations are in Pangkal Pinang, Bangka Belitung. As of March 31, 2022, its A class shares were owned by the Indonesian government, and its B class shares by PT Indonesia Asahan Alumunium (Persero) (65.0%) and the public (35.0%). (ends)