JAKARTA. Analysts believes that the rights issue held by PT Cita Mineral Investindo Tbk. will help the company improve its financial condition.
Artha Sekuritas Indonesia analyst Nugroho R. Fitriyanto said that if the proceeds of the rights issue were used according to plan (for debt payment), the company would have a healthier balance sheet.
"With this deleveraging, the company's balance sheet will be healthier so that CITA can be more resilient in the midst of industrial conditions, especially commodities industry, that has been very volatile lately," Nugroho said as quoted by Bisnis.com on Friday (31/1).
In the first nine months of 2019, CITA had paid a total interest of Rp 1.22 trillion. If the proceeds of the rights issue were used the plan, Nugoro assesses that it will reduce CITA's net gearing ratio from 0.51 times in Q3 2019 to at least 0.03 times.
In addition, with the deleveraging, CITA's profitability can increase along with reduced interest expenses. As of Q3 2019, CITA's net profit was recorded at Rp 740 billion, while its interest expenses were recorded at Rp 46 billion. (AM/AR)