material discussion pt jasa armada indonesia, tbk. · pelindo ii (ipc) group public 23%... 4 key...

December, 2018

MATERIAL DISCUSSION

PT Jasa Armada Indonesia, Tbk.

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1

Table of Contents

Section Title Page

1 Company Overview 3

2 Business Process & Model 6

3 Business Development 13

4 Operational & Financial Highlights 20

5 Key Investment Highlights 25

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2

Section 1

Company Overview

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3

Shareholders and Group Structure

Shareholders

PT Jasa Armada Indonesia Tbk

PT Pelabuhan Indonesia II

(Persero)

PT Multi Terminal Indonesia

Koperasi Pegawai Maritim

76.89%0.11%

99.00%

1.00%

Pemerintah Republik Indonesia

100.00%

Pelindo II (IPC) Group

Public23%

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4

Key Facilities

74Vessels

(Tugboat, Pilot boat, Mooringand Bulk Carrier)

879Professional Employees

11Operational offices

Sumatera

Java

Kalimantan

PelabuhanTeluk BayurPelabuhan

Teluk Bayur

PelabuhanBengkuluPelabuhanBengkulu

PelabuhanPanjang

PelabuhanPanjang

PelabuhanJambi

PelabuhanJambi

PelabuhanPangkal Balam

PelabuhanPangkal Balam

PelabuhanPalembangPelabuhanPalembang

PelabuhanTanjung Pandan

PelabuhanTanjung Pandan

PelabuhanBanten

PelabuhanBanten

PelabuhanTanjung Priok

PelabuhanTanjung Priok

PelabuhanCirebon

PelabuhanCirebon

PelabuhanPontianakPelabuhanPontianak

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5

Section 2

Business Process & Model

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6

Line of Business

Pilotage and Towage

JAI provides pilotage & towage services to ensure smooth and safe berthing for vesselsentering and departing Seaports, Inland Waterways, and Oil & Gas Offshore Ship-to-Ship(STS) Activities.

Based on Ministry of Transportation (MoT) regulations which complies with internationalregulations, all vessels above 500 GT are subject to pilotage and towage, in which mandated port operators and STS operators has to provide such activity under Indonesian maritime law.

Pilotage is essentialy an activity under State Authority, inrespective port operators as state representatives.

which delegated and mandated to

Piloton Board

Piloting &Towing INVessel Arrival Berthing

Loading &Unloading

VesselDeparture

Piloting &Towing OUT

Pilotoff Board

Pilotage & Towage Flow Chart

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7

Use of Services

Guardian of Commodity, Trade & Environment

Piloting and towing are essentialsfor maneuvering ships throughdangerous or congested waters,such as harbors, river mouths oroffshore transshipments.

Without pilot andall ports and oil transshipment

towing services,& gas offshore

would beexposedrisks.

with unacceptable

Pilotage & Towage for

Offshore STSPilotage & Towage for

Inland Wateways

Pilotage & Towage for

Container Vessels

Pilotage & Towage for

Bulk & Liquid Cargos

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Business Segments

Private Terminal/TUKSPublic Port

Inland Waterways Tersus/STS

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Cargo Shipping

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9

Pricing Policies

IPC Public Ports

• Pilotage & Towage tariffs are similar to how taxi fares are charge:

• Fixed floor charge, similar to taxi metre starts;

• Variable tariffs based on he category of ships and their tonnage multiplied by thehours of service on multiples of 30 minutes.

• International vessels are charged in USD. The price is around 10% higher than in PSA

Singapore. Local vessels are charged in IDR, the price is muchvessels.

lower than international

• Upfront payment with low risk to default.

• Tariff revision every 2 years. JAI and INSA (Indonesia Nationaldecide tariff incremental, approved by MoT.

Shipwoners Association)

Domestic

Vessels,

29.58%

International

Vessels,

70.42%

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Pricing Policies

Private Terminals

Pilotage & Towage tariff for Private Terminals follows Port Terminal tariff structure.

Inland Waterways

Pilotage & Towage only required upon Municipal regulations in special locations due to dangerousor congested waters. Tariff structure follows Port Terminal, but historically round 300% higher.

STS

Pilotage & Towage tariffs are charged based on:

• Towage Rental: calculated on USD x HP x 360 days, paid by O&G companies (STSoperator);

• Service Charge: on Ship Call basis, paid by the Shippers.

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11

Fleet Maintenance

Fleet Inspection & Upgrading

• After spun off, in 2015 JAI hired Thome Consulting to inspect and upgrade the fleet, fromprevious grade 2.4 (48% from highest grade 5) to become currently grade 3.6 (72%). Average vessel age is 8.5 years, relatively young for 20 years lifetime.

Excellent Maintenance System

• Trained by Thome Consulting, JAI executes daily maintenance for engine and lubricant,body and painting by the crews, supervised by Technical Superintendents, using AMOS ITmaintenance management.

Cost Effectiveness:

• Lubricants and Painting with vendor guarantee to replace at their own cost shall the

spareparts lifetime not exceeding the guaranteedtime.

Docking

duration. Inventories are provided just in

• Comply with class & statutoryregulations, docking every 2.5 yearsand checked by Class Surveyors.

Under Water Inspection in Lieu of DryDocking (UWILD)

• An internationally accepted alter-

native to dry-docking inspectioninspectionsurveys, with sub-surface

to reduce downtime.

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Section 3

Business Development

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13

New Customer

Service : Pilotage, Towage and STS Operations

Customer : Coal Miners Along Musi River

Location : Ambang Luar Sungai Musi, Palembang

Start Operation : October 2018

Volume Target : ± 14 Vessels per month.

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New Customer

Service : Pilotage, Towage and STS Operations

Customer : ExxonMobil Oil Terminal

Location : Lamongan, Jawa Timur

Start Operation : On Progress

Volume Target : ± 8-10 Domestic vessels and 2-4 Foreign vessels per month.

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15

Investment

Progress : Keel Laying on 27 November 2018 with PT Citra ShipyardItem : 4 units Tugboat 2 x 2200 HP type Azimuth Stern Drive (ASD)Contract Value : IDR 223,85 Billion.

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Section 4

Operational & Financial Highlights

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Operational Highlights

No Type of Fleet Owned Leased Total Fleet

1 Tug Boat 1200 HP - 12 12

2 Tug Boat 2400 HP 3 11 14

3 Tug Boat 3200 HP 9 2 11

4 Pilot Boat 9 21 30

5 Mooring Boat 2 3 5

6 Bulk Carrier - 2 2

Total 23 51 74

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Operational Highlights

Tonnage Shipping and Freight (IDR)HSD average price (Rp/liter)

Utilization Rate (Towage)Time & GT (Towage)

155,144

118,370

97,190

186,111 184,107

219,105

-

50,000

100,000

150,000

200,000

250,000

2017 9M17 9M18

Tonnage Freight (IDR)

6,075

7,372 7,253

9,591

-

2,000

4,000

6,000

8,000

10,000

12,000

2016 2017 9M17 9M18

HSD

161,206 152,401

112,014 122,417

132,069 134,233

99,925 109,701

-

50,000

100,000

150,000

200,000

2016 2017 9M17 9M18

Time GT (in '0000)

52

55

54

49

46

48

50

52

54

56

2016 2017 9M17 9M18

Utilization rate (%)

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19

Financial Highlights

EBITDA (IDR billion) & EBITDA MarginOperating Profit (IDR billion) & Operating Margin

Revenues (IDR billion)Financial Position (IDR billion)

Note:

• Revenue during 2017 decreased compared to 2016 due to Pelindo II policy to fully comply government regulation, of which the

government has delegated pilotage services to Pelindo II for Pelindo II territories, therefore pilotage revenue 2017 and onward is

accounted as Pelindo II’s revenue. Although JAI’s revenue is declined, its EBITDA Margin and Net Profit Margin increased because

pilotage tariffs in public ports (Pelindo II) are considered as public service obligations.

• In 2018 revenue sharing from Pelindo II to JAI is 85% compared to 99% in 2017. As of January 2018, PNBP obligation belongs to

Pelindo II.

Balance sheet (Rp bn) 2016 2017 9M18

Assets 598 1,356 1,277

Liabilities 262 352 218

Equity 598 1,356 1,059

Current ratio 2.0 2.6 4.0

Net gearing Net cash Net cash Net cash

Net debt to EBITDA 1.2 Net cash Net cash

172 174

109

130

20.8%

23.4%

20.2%

23.8%

18.0%

19.0%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

-

50

100

150

200

2016 2017 9M17 9M18

EBITDA EBITDA margin

169 167

107 110

20.4%

22.4%

19.8%20.1%

-

50

100

150

200

18.0%

19.0%

20.0%

21.0%

22.0%

23.0%

2016 2017 9M17 9M18

Operating profit (IDR bn) Operating margin

828

668

159

8

747 685

-65

546 546

-66

-

200

400

600

800

1,000

Revenues Towage Pilotage Others

2016 2017 9M18

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Financial Highlights

Revenue Contribution per Area

In 9M18, Revenue is dominated by ship service

segment in the form of towage service of 89%.

Nevertheless, the Company is developing a new

business segment of which sea freight service and

ship management that contributes of some 16% to

total revenue.

Revenue Contribution per Segment

Port of Tanjung Priok contributes 48% of total

revenue. 61% of JAI’s total revenue is contributed

by 2 major ports which are Tanjung Priok and

Palembang. And the new business segment which

is sea freight service contributes 12% of total

revenue.

48%

13%

12%

8%

7%6% 6%

Tanjung Priok

Palembang

Kantor Pusat

Banten

Panjang

Teluk Bayur

Cabang Lain

87.8%

4.4%7.7%

Jasa Pelayanan Kapal

Freight services

Fleet management

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17%

13%

67%

100%

Net Profit GA Expense COGS Net Revenue

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Revenue & Cost Structure

SG&A StructureCOGS Structure

Revenue Structure

I/S Structure

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Section 4

Key Investment Highlights

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23

Key Investment Highlights

1

2

3

45

6

7

Special Delegationfrom State Authority

Captive & Prepaid Customers

The Largest, Most Reliableand Most ProfitablePilotage & Towage Company

Capex Light withClean Balance Sheet

STS & Shipping Market Acquisition

to Create More Value

Solid Growth,in Fully Funded

Port Development

ExperiencedManagement Team

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1. Special Delegation from State Authority

Ministry of Transportation

Granted to some companies

for private use only

JAI is the only company that

Delegation

Pilotage RegulationsPort & STS Operator

License (BUP)Pilotage Delegations

All vessels 500 GT and above entering and departing BUP

are subject to pilotage and towage.

Public Ports:

Only granted to 4 SOEs (Pelindo I – IV), operated in

separate territories

Public Ports:

Only granted to 4 SOEs

(Pelindo I – IV). JAI is the sole operator in IPC jurisdictions.

Private Terminals (TUKS): Granted to 3 SOE subs: JAI;

KBS (does not have pilots nor tugs); PTBA’s (no longer

operates). Also granted to very few terminal owners.

Private Terminals (TUKS):

that have sea/river terminals,

STS Operators (Tersus):

Oil & Gas Offshore Ship-to-Ship Operators STS (Tersus):

has pilotage delegation in STS

territoriesNote: BUP excludes Pilotage

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2. Captive and Prepaid Customers

IPC Public Ports are the only choices for the industries nearby in strategic locations. JAI is theonly pilot and towage vessel provider in all Public Ports under IPC jurisdictions.all customers to pay service price in advance with low risk to default.

IPC requires

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3. The Largest, Most Reliable & Most Profitable in The Business

the oldest existing pilotage and

Indonesia.

Marine Service Company

Pilotage & Towage Company

pilotage & towage company in

The Most Profitable

17%NPM

JAI is the most profitable

Indonesia.

Coverage

Maximum coverage, including

Advanced Protection & Indemnity

500USD Million

third party assets coverage.

The Most Prominent and Acknowledged

The Company has been granted with Safety Management certifications.

The Most Experienced

57Years

Since the commencement of its service in 1960, JAI has become

towage service provider in

The Largest Fleet in The Business

74Vessels

With 74 fleets under management to support 11 IPC ports, more than 50 TUKS and its STS businesses.

Relatively young vessels age of

8.5 year to support future expansion

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4. Capex Light with Clean Balance Sheet

JAI is in net cash position with a fleet of 74 vessels. It is operating at 49% utilization as of9M18, with utilisation ceiling at 65% and sufficient for next 3 years.

Fleet

Offshore STS

Private Terminals

Inland Waterways

Maximizing

Utilization, Minimizing

Costs

Operating Offices in IPC Ports

in 11 StrategicLocations

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5. Captive Growth In Fully Funded Port Development

IPC plans to develop new ports, declared as National Strategic Projects by PresidentialDecrees. With these projects, IPC will double its capacity in next 5 years. Total projectUSD 1.6 B, fully funded. JAI will be the sole pilot & towage provider in the new ports.

cost is

Port of SorongPort of Kijing, West Kalimantan

Cikarang Bekasi LautNew Priok, Jakarta

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6. STS Market Acquisition to Create More Value

On May 23rd, 2017,MoT has declared toenforce pilotagecompiance in all portand STS activities.

Currently, JAI is theonly operator that

has license in those“ExtraordinatyPilotage Territories”.

JAI is committed tosupport MoT andSKK Migas (MoE asthe owner of oil & gasresources) to enforcecompliance with MoTpilotage regulations.

Through this lawenforcement scheme,JAI aims to increasemarket share fromcurrently 10% tobecome 50% in next3 years.

PT Jasa Armada Indonesia, Tbk

Thank You