Krakatau Steel (Persero) Tbk PT

Krakatau Steel’s capital structure is highly leveraged, with a debt-to-equity ratio of 1.99 and long-term debt of $1.34 billion, which exceeds its total equity of $674 million. The company’s liquidity position is weak, as evidenced by a current ratio of 0.73 and negative operating cash flow of -$1.75 million, despite a free cash flow of $329 million. Profitability metrics show mixed performance. The company’s return on equity (ROE) of 48.29% is significantly higher than the typical ROE for the Iron & Steel industry, which is usually below 10%, but its return on assets (ROA) of 11.77% is in line with industry norms. Gross profit of $50.75 million and operating income of $589.72 million indicate strong top-line performance, but the net income of $325.46 million is constrained by high debt servicing costs. The company’s revenue is concentrated in its Steel Products segment, which dominates operations, while the Infrastructure Facility, Engineering and Construction, and Other Services segments contribute smaller shares. Geographically, the company is heavily exposed to domestic markets, with no disclosed international revenue streams. Growth appears to be stagnant, with no significant revenue growth reported in the latest period. The company’s outlook for the current fiscal year shows no directional change in revenue, and the next fiscal year is expected to follow a similar trend. Capital expenditure of -$34.71 million suggests asset disposals or underutilized capital spending. The company faces moderate liquidity risk due to negative operating cash flow and a current ratio below 1. While dilution risk is currently low, the high debt load and potential need for refinancing could increase dilution pressure in the future. Adjustments in valuation metrics, such as the extremely high price-to-book ratio of 8,152.75, reflect market skepticism about the company’s ability to sustain profitability. Recent filings and transcripts have not disclosed major strategic shifts or capital-raising events. The company’s 10-K Risk Factors highlight exposure to commodity price volatility and regulatory changes in the steel industry, but no new material events have been reported in the latest period.