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To assess the Moodys assessment, financial statements of 2008, 2009 and 2010
are needed. Some of the ratios in Moodys Global Steel measurement are using data
of three years while other ratios only use the data of 2010.
In this rating methodology, there are four categories that Moody is focusing. Those
categories are:
1.
2.
3.
4.
The four categories will be broken down into ten sub factors. Below are the key
rating factors including the weight score of each category:
Categorie
s
Broad
Rating
Factor
Size and
Business
Profile
35%
Subfactor
Weight
ing
25%
2. Operational Diversity
10%
3. Regional Diversity
4. Import Threat/Export Reliant
Operatin
g
Performa
nce and
Volatility
10%
25%
Financial
Policies
25%
Financial
Strength
5%
(3 year average)
3. Volatility based on the Coefficient of
Variation of CFO/Net Sales
1. Debt/Capital
10%
15%
15%
10%
5%
5%
5%
100%
100%
To analyze using Moodys there are seven rating categories. Those categories vary
from Caa to Aaa. Caa is the worst rating that a company can achieve while the Aaa
rating is the highest one. Score attached for each rating is also vary, from zero to
six. Below are the indicated rating categories in Moodys.
Aaa
6
Cate
gorie
s
Aa
5
A
4
Broad
Rating
Rating
Factor
Sub-factor
Baa
3
Ba
2
B
1
Subfacto
r
Weig
hting
Caa
0
Aaa
Aa
Baa
25%
Aaa
35
25 Aa <
35
15 A <
25
5 Baa
< 15
10%
Aaa=
8
Aa=7
A=5 or 6
Baa=3 or
4
10%
Aaa
30%
20% Aa
< 30%
15% A
< 20%
8.0%
Baa <
15%
5%
Aaa
20%
15% Aa
< 20%
10% A
< 15%
5% Baa
< 10%
10%
Aaa <
15%
15% Aa
< 25%
25% A
< 40%
40%
Baa <
60%
15%
Aaa <
20%
20% Aa
< 30%
30% A
< 40%
40%
Baa <
50%
10%
Aaa <
0.75x
0.75x
Aa <
1.25x
1.25x
A <
2.0x
5%
Aaa
15x
10x Aa
< 15x
7x A <
10x
5%
Aaa
55%
45% Aa
< 55%
35% A
< 45%
5%
Aaa
30%
20% Aa
< 30%
14% A
< 20%
2. Operational Diversity
3. Regional Diversity
4. Import Threat/Export Reliant
1. EBIT Margin (3 year average)
Operatin
g
Performa
nce and
Volatility
2
Financial
Policies
Financial
Strength
4
Total
100
%
Exhibit 1
Moodys Global Steel Methodology Factor Grid
2.0x
Baa <
3.0x
4.0x
Baa
<7.0x
25%
Baa <
35%
8%
Baa <
14%
Exhibit 2
Size and Business Profile
Size and Business
Profile (score)
Krakata
u Steel
Net Consolidated
Sales
Operational
Diversity Regional
Diversity Import
Threat / Export
Reliant
Gunawa
n
Dianjay
a
Jaya
Pari
Steel
POSC
O
Arcelo
r
Mittal
U.S
Steel
For the Business Size and Profile (the net consolidates Sales), the currency used is
USD.
And 1 USD is assumed to be 8555 IDR.
For the EBIT Margin, it is derived from Average EBIT of three years (2008-2010) is
divided by Average Revenue of three years. For the EBIT itself it is gotten from
Income before tax - EBT gain on foreign exchange + interest Interest Income gain on investment - gain on assets. While for the return average tangible asset,
Anto uses EBIT/(Total asset-other asset).
Exhibit 3
Collected Data of Three Local Steel Companies
(in IDR
million)
Krakatau Steel
COGS
2008
20631
431
17915
367
2009
16913
535
15728
146
2010
14856
156
12621
376
gross profit
Operating
Exp
27160
64
13556
76
11853
89
11594
49
22347
80
12418
51
Operating
Income
13603
88
25940
99292
9
net income
EBIT
45957
1
15366
49467
2
41349
10626
83
12984
Revenue
Gunawan Dianjaya
Steel
2008
2009
2010
3020
1641
1710
530
555
132
2460
1829
1413
755
359
251
5597
1878
2968
75
04
81
1425
8562
9075
73
2
7
1425
2734
2061
73
26
24
8307
1500
1714
0
55
28
2610
1456
2112
2009
3028
68
2674
60
2010
4277
92
3720
59
1153
84
1703
3
3540
8
1510
3
5573
3
1731
4
9835
1
2030
5
3841
9
4915
8
9281
1917
2172
2844
5
4127
Asset
Debt
Equity
CFF
00
80
10
76
34
15374
427
99346
66
54397
61
12795
803
69899
65
58058
38
17584
059
82901
44
92939
15
2092
780
1919
567
1732
13
9707
37
4964
52
4742
85
1074
570
4288
56
6457
13
3993
44
1296
33
2697
11
3539
51
8226
2
2716
89
4112
82
1111
48
3001
34
26634
32
-7468
18400
1
9626
9990
0
4882
6
3722
0
60712
3
20321
0
CFO
CFI
88337
9
18216
2138
74
9885
1
5240
2
3499
5
1168
95
-90
-542
-1336
4676
10
84842
9
10283
99
Exhibit 4
Collected Data of Three Global Steel Companies
Operating Exp
200
8
331
41
240
48
909
3
339
8
POSCO
200
9
316
49
245
67
708
2
376
0
201
0
534
30
430
35
103
95
533
9
Operating
Income
569
5
332
2
net income
345
4
EBIT
(in USD
million)
Revenue
COGS
gross profit
Asset
Debt
Arcelor Mittal
2008
2009
2010
1249
36
1000
10
2492
6
1269
0
6511
0
5801
9
7091
7802
5
6668
9
1133
6
8769
7731
505
6
1223
6
1678
3605
276
4
368
4
9399
118
2916
512
7
370
2
527
6
1405
3
2741
3434
U.S Steel
200 200 201
8
9
0
237 110 173
54
48
74
197 115 162
23
97
59
403
111
1 -549
5
113 122
962
5
6
306 168
9
4 -111
211 140
2
1 -482
317 168
6
6 -190
372
84
153
21
432
06
166
63
598
69
291
22
1330
88
7789
0
1276
97
6665
2
1309
04
6847
4
160
87
111
92
154
22
107
46
153
50
114
99
Equity
CFF
CFO
CFI
219
63
265
43
307
47
5519
8
6104
5
6243
0
489
5
467
6
385
1
247
4
297
1
460
7
740
738
9
834
4
500
4
178
4
607
1
2132
1465
2
1242
8
6347
-7
938
335
7278
4015
-61
-379
2784
3438
-305
165
8
103
2
-374
-583
Exhibit 5
Other Collected data of Six Steel Companies
Three Years
Average
(2008-2010) in
million
Depreciation
interest
Expense
Other Asset
Free Cash Flow
Krakata
u Steel
(IDR)
353292
360295
256230
415816
Gunawa
n
Dianjay
a (IDR)
29116
Jaya
Pari
Steel
(IDR)
933
2215
Arcelo
r
Mittal
(USD)
4935
40877
6692
802
74
423
797
1930
11299
174
279
110098
60343
2220
916
116
Posco
(USD)
U.S
Steel
(USD)
481
Exhibit 6
Aggregate Weighted Factor Score
Factor Numeric
Indicated
Rating
Aggregate Weighted
Factor Score
Aaa
x > 5.5
Aa1
5.2 < x 5.5
Aa2
4.8 < x 5.2
Aa3
4.5 < x 4.8
A1
4.2 < x 4.5
A2
3.8 < x 4.2
A3
3.5 < x 3.8
Baa1
3.2 < x 3.5
Baa2
2.8 < x 3.2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
2.5
2.2
1.8
1.5
1.2
0.8
0.5
0.0
<
<
<
<
<
<
<
<
x
x
x
x
x
x
x
x
2.8
2.5
2.2
1.8
1.5
1.2
0.8
0.5