SMMA will release Rp 1 trillion MTN in 2017

JAKARTA. PT Sinarmas Multiartha Tbk (SMMA) plans to raise a large amount of funds in 2017. This financial issuer is ready to release medium term notes (MTN) in January 2017.

SMMA plans to release MTN through its subsidiary. However, SMMA did not want to reveal the identity of the subsidiary. “The value will be at maximum of Rp 1 trillion,” said Director of SMMS Kurniawan Udjaja.

On 15 December 2016, SMMA through its subsidiary PT Sinar Mas Multifinance has released 2016 Sinar Mas Multifinance III as much as Rp 500 billion, with a five years tenor and a 9.5% interest rate per year.

The financing company also issued a worth of 500 billion of 2016 Sinar Mas Multifinance II MTN. The MTN has three years tenor with a 9.5% interest rate per year. The MTN transaction is expected to complete in 23 December 2016.

Kurniawan did not specify the other strategies of the company in the next year. SMMA itself is still monitoring the development of domestic and global economy to determine the business agenda for 2017.

Capital expenditure

SMMA is still optimistic with economic development in the next year. Therefore, SMMA and its subsidiary will likely benefit from the government’s infrastructure projects along 2017. SMMA is targeting to secure a 10%-15% income growth in 2017. Kurniawan said, SMMA’s subsidiaries even can have a higher income growth in the next year.

SMMA itself will allocate Rp 667 billion of capital expenditure in 2017, including Rp 564 billion of capital expenditure, which will be allocated by Bank Sinarmas.

Kurniawan refused to reveal the sources of the capital expenditure. However, he said that SMMA’s subsidiaries, mainly in insurance, securities, and multifinance sectors depend more on internal cash flow.

As of the end of quarter III of 2016, the income of SMMA increased by 57% from Rp 11 trillion in the quarter III 2015 to Rp 17.27 trillion, while the net profits increased by 106% to Rp 833 billion.

Analyst at NH Korindo Securities Bima Setiaji estimates that SMMA aims at funding the expansion at financing sector in the next year by issuing the MTN. In 2017, SMMA will expand the financing of car and second-hand motorcycle. This sector is predicted to drive the increase in consumer financing. “I think the MTN coupon at the range of 9%-9.5% is attractive enough,” he said.

In a fundamental manner, in terms of liquidity, the current ratio of SMMA is above of 1 time. The position shows that the company is able to fulfill the liquidity in a short term. Meanwhile, the gearing ratio of SMMA reached 1.9 times. This shows that the company still can maintain its debt level.

(Muhammad Farid/Translator)