PT Sinar Mas Agro Resources and Technology Tbk Announces Significant Bond and Sukuk Issuance for 2026

Key Highlights from the Public Offering

• Major Financial Move: PT Sinar Mas Agro Resources and Technology Tbk (“SMART”) will conduct the second phase of its Sustainable Public Offering for both conventional bonds (Obligasi Berkelanjutan V SMART Tahap II Tahun 2026) and sharia-compliant Sukuk Ijarah (Sukuk Ijarah Berkelanjutan I SMART Tahap II Tahun 2026).
• Issuance Size: The company will issue:
  • Bonds: Rp672 billion (divided into two series: Series A – 5 years, Series B – 7 years).
  • Sukuk Ijarah: Rp528 billion (Series A – 5 years, Series B – 7 years).
• Ratings: Both instruments have secured an idAA- (Double A Minus) rating from Pefindo, reflecting strong financial flexibility and integrated plantation business.
• Use of Proceeds:
  • Bonds: ~78% to repay long-term bank loans (mainly to BCA), with the rest for working capital.
  • Sukuk: ~99% to refinance maturing bonds, including Obligasi Berkelanjutan II SMART Tahap III 2021 Series C (Rp220 billion, 9.5% p.a., due Feb 2026) and Obligasi Berkelanjutan III SMART Tahap I 2021 Series C (Rp300 billion, 9.25% p.a., due June 2026); remainder for working capital.
• Structure: No specific asset collateral; all bondholders have equal rights (paripassu) with other creditors, unless secured otherwise.
• Buyback and Sinking Fund Policy: No sinking fund; company allowed to repurchase bonds/sukuk after one year, under strict conditions, and must report to OJK if repurchase occurs.
• Key Dates:
  • Public Offering: 29–30 January 2026
  • Allotment Date: 2 February 2026
  • Distribution and Listing: 4–5 February 2026
• Financial Covenants:
  • Debt-to-equity ratio capped at 2.5x (actual at 0.7x as of September 2025)
  • Interest coverage ratio minimum 2.25x (actual 5.0x)
  • Current ratio minimum 1x (actual 1.9x)
  • DSCR minimum 1x (actual 1.5x)
• Main Risks: Climate change impact on plantations, and liquidity risk for the bonds and sukuk.

Financial Performance Snapshot

• As of 30 September 2025 (not audited):
  • Total Assets: Rp43.3 trillion
  • Total Liabilities: Rp21.8 trillion
  • Total Equity: Rp21.4 trillion
  • Net Sales (9M 2025): Rp65.7 trillion
  • Net Profit (9M 2025): Rp1.6 trillion (up 54.4% YoY)
  • EBITDA/Interest Ratio: 5.0x (strong liquidity)
  • Leverage: Debt-to-equity at 0.7x (well below covenant cap)
  • ROE (9M 2025): 7.5%
• Dividend Policy: Not explicitly mentioned in this offering document; focus is on debt repayment and working capital.

Shareholder and Corporate Structure

• Major Shareholder: PT Purimas Sasmita holds 92.4% of shares; public float at 7.6%.
• Management: No recent changes in board or management composition. Franky Oesman Widjaja is President Commissioner; The Biao Leng is President Director.
• Subsidiaries: The group owns/controls several significant entities engaged in palm oil plantation and downstream industries. Key revenue contributors include Kresna, Leidong, Satya, Tapian, SOCI, and SBE.

Potential Price-Sensitive Issues for Investors

1. Large-Scale Refinancing and Debt Management: The company’s strong focus on refinancing maturing debt with new, lower coupon debt (6.2–6.5% vs. 9–9.5% previously) could significantly reduce interest expenses and improve net margins, positively impacting future earnings and potentially share price.
2. Strong Credit Ratings: Maintaining a high (idAA-) rating may support investor confidence and lower risk premiums, further benefiting share valuation.
3. Solid Financial Ratios: Current leverage and liquidity ratios are comfortably within covenant limits, indicating prudent financial management and reducing default risk.
4. Risks from Climate and Commodity Volatility: The document highlights exposure to climate change and global commodity price swings, which could impact future profitability. Material adverse developments in these areas may pressure share values.
5. No Sinking Fund: The absence of a sinking fund for bond/Sukuk repayment could increase rollover or liquidity risk if market conditions deteriorate.
6. Buyback Flexibility: The company’s right to repurchase bonds/Sukuk up to 5% annually without announcement (if not affiliated) provides flexibility in liability management but may affect trading liquidity for debt securities.
7. Use of Proceeds and Working Capital: The allocation of part of the proceeds to working capital could support business expansion or buffer against market volatility, potentially supporting future earnings.

Strategic Outlook and Business Trends

• Integrated Business Model: SMART operates across the palm oil value chain (plantation, processing, refining, trading, logistics).
• Export Markets: Key export destinations include Singapore, China, and India, supporting revenue diversification.
• Operational Scale: 14 factories and 6 warehouses; part of the larger Golden Agri Resources group.
• Sector Risks: High dependence on external feedstock, and regulatory/policy risks related to environmental issues and global trade.

Key Details for Investors

• Bookbuilding/Offering Period: 29–30 January 2026
• Electronic Distribution: 4 February 2026
• Minimum Order: Rp5,000,000 or multiples thereof
• Listing: Indonesia Stock Exchange
• Full Commitment Underwriting: The offering is fully underwritten by a consortium of major securities houses.

Conclusion

The upcoming bond and Sukuk Ijarah issuance by PT Sinar Mas Agro Resources and Technology Tbk is a major financial event that signals proactive debt management, improved cost of capital, and continued business growth. The company’s strong financial ratios, robust credit rating, and integrated operations provide confidence to investors. However, shareholders should remain vigilant regarding commodity price swings, climate-related risks, and the absence of a sinking fund for debt repayments.

This news is likely to be price sensitive, potentially supporting the company’s share value due to reduced financing costs and enhanced financial flexibility.

Disclaimer: This article is intended for informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any securities. Investors should conduct their own due diligence and consult with their financial advisors before making investment decisions. The author and publisher are not liable for any losses or damages arising from the use of this information.

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