MIRA INFORM REPORT

Report Date :

21.03.2011

IDENTIFICATION DETAILS

Correct Name :	P.T. HIJAU LESTARI RAYA FIBREBOARD
Registered Office :	Desa Pematang Palas, Kecamatan Bayuasin 1, Kabupaten Banyuasin, South Sumatera
Country :	Indonesia
Date of Incorporation :	28.06.2007
Com. Reg. No.:	No. AHU-56713.AH.01.02.TH.2008
Legal Form :	Limited Liability Company
Line of Business :	Medium Density Fibreboard, Phenol Formaldehyde and Urea Formaldehyde Manufacturing

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	US$ 2,000,000
Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – December 31, 2010

Country Name	Previous Rating (30.09.2010)	Current Rating (31.12.2010)
Indonesia	b1	b1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Name of Company

P.T. HIJAU LESTARI RAYA FIBREBOARD

company Address

Head Office & Factory

Desa Pematang Palas

Kecamatan Bayuasin 1, Kabupaten Banyuasin

South Sumatera

Indonesia

Phone - (62-711) 373459, 372747, 372748

Fax - (62-711) 373 473

E-mail - pth@hijaulestari.co.id

Website - http://www.hijaulestari.co.id

Land Area - 10.8 hectares

Factory Space - 55,000 square meters

Region - Industrial Zone

Status - Owned

Date of Establishment

28 June 2007

Legal Form

P.T. (Perseroan Terbatas) or Limited Liability Company

Company Registration

The Department of Law and Human Right

- No. W7-08672 HT.01.10-TH.2007

Dated 3 August 2007

- No. AHU-56713.AH.01.02.TH.2008

Dated 29 August 2008

Status

Foreign Investment (PMA) Company

Permit by the Government Department

The Department of Finance

NPWP No. 02.649.896.4-301.000

The Capital Investment Coordinating Board

No. 770/I/PMA/2007

Dated 18 June 2007

Related Companies

A member of the MANUNGGAL SEMPURNA Group

a. HARAPAN BARU WOODBASED INDUSTRY, P.T. (Integrated Woodbased Industry)

b. HIJAU LESTARI RAYA FIBREBOARD, P.T. (Medium Density Fibreboard, Phenol Formaldehyde and Urea Formaldehyde Manufacturing)

c. HUTRINDO JAYA FIBREBOARD MANUFACTURING COMPANY, P.T. (Investment Holding)

d. MANUNGGAL MARAN SHOES INDUSTRY, P.T. (Leather Shoe Manufacturing)

e. MANUNGGAL SEMPURNA, P.T. (Trading and Management Trust)

f. MASA JAYA SEJAHTERA, P.T. (Trading)

g. SERINDO DJAJA MARMER, P.T. (Ceramic Tile Manufacturing)

h. SINJAL DJAJA MARMER, P.T. (Logging and Sawmilling)

i. SINAR BELANTI DJAJA LTD., P.T. (Logging)

j. SINCERE ENTERPRISE CO, LTD. (Trading)

k. TANJUNGPANDAN PERMAI AQUABIO INDUSTRIES, P.T. (Shrimp Culture and Marine Processing)

l. TOP JAYA SARANA UTAMA, P.T. (Distribution of Electronic and Electrical Household Appliances)

m. TOPJAYA ANTARIKSA ELECTRONICS, P.T. (Assembling and Manufacturing of Electronic and Electrical Household Appliances)

n. WANA BANGUN AGUNG, P.T. (Integrated Woodbased Industry)

CAPITAL AND OWNERSHIP

Capital Structure :

Authorized Capital - US$ 8,000,000.-

Issued Capital - US$ 4,200,000.-

Paid up Capital - US$ 4,200,000.-

Shareholders/Owners :

a. EVERGREEN FIBREBOARD BERHARD - US$ 2,142,000.-

Address : PLO 22, Parit Raja Industrial Estate

86400 Parit Raja, Batu Pahat

Johor, Malaysia

b. P.T. HUTRINDO JAYA FIBREBOARD MFG. CO. - US$ 1,932,000.-

Address : Jl. Kalibesar Barat No. 40

Jakarta Barat

Indonesia

c. P.T. UFORIN PRAJEN ADHESIVE INDUSTRY - US$ 126,000.-

Address : Jl. Kalibesar Barat No. 40

Jakarta Barat

Indonesia

BUSINESS ACTIVITIES

Lines of Business :

Medium Density Fibreboard, Phenol Formaldehyde and Urea Formaldehyde Manufacturing

Production Capacity :

a. Medium Density Fibreboard - 120,000 cubic meters p.a.

b. Phenol Formaldehyde - 30,000 tons p.a.

c. Urea Formaldehyde - 45,000 tons p.a.

Total Investment :

a. Equity Capital - US$ 4.2 million

b. Loan Capital - US$ 20.8 million

c. Total Investment - US$ 25.0 million

Started Operation :

February 2008

Trade/Brand Name :

Hijau Lestari Raya Fibreboard

Number of Employee :

356 persons

Marketing Area :

Domestic - 15%

Export - 85%

Main Customer :

Trading and Distribution of MDF Products, Building Material Trading

Market Situation :

Very Competitive

Main Competitors :

a. P.T. CANANG INDAH

b. P.T. P.T. PARINDO PERMAI

c. P.T. RIMBA PARTIKEL INDONESIA

d. P.T. SUMATERA PRIMA FIBREBOARD, Etc.

Business Trend :

Growing

BANKER, AUDITOR & LITIGATION CHECKS

Bankers :

a. P.T. Bank OCBC NISP Tbk

Wisma GKBI

Jalan Jend. Sudirman No. 28

Jakarta Pusat

b. P.T. Bank CENTRAL ASIA Tbk

Palembang Main Branch

Palembang, South Sumatera

Indonesia

Auditor :

Internal Auditor

Litigation Checks :

No Litigation record in our database and the local courts

Bankruptcy Checks :

No bankruptcy filing was recorded at the local courts

FINANCIAL FIGURE

Annual Sales (estimated) :

2008 – Rp. 135.0 billion (February – December)

2009 – Rp. 145.0 billion

2010 – Rp. 153.0 billion

Net Profit (estimated) :

2008 – Rp. 12.1 billion

2009 – Rp. 13.0 billion

2010 – Rp. 13.8 billion

Payment Manner :

Average

Financial Comments :

Satisfactory

KEY EXECUTIVES

Board of Management :

President Director - Mr. Kuo Jen Chang

Vice President Director - Mr. Erik Setiawan

Director - a. Mr. Francis Lee Choon Hui

b. Mr. Kuo Jen Chiu

Board of Commissioner :

President Commissioner - Mr. Ir. Akie Setiawan AKA Kho Tong Kie

Commissioners - a. Ms Mary Manerietta Lim Kim Neo

b. Ms Tee Kim Foom

c. Mr. Williatmo Tantra

Signatories :

President Director (Mr. Kuo Jen Chang) or Vice President Director (Mr. Erik Setiawan) or the Director (Mr. Francis Lee Choon Hui) must be approved by the Board of Commissioners.

CAPABILITIES

Management Capability :

Good

Business Morality :

Good

Credit Risk :

Average

Credit Recommendation :

Credit should be proceeded with monitor

Proposed Credit Limit :

Small amount – periodical review

Maximum Credit Limit :

US$ 2,000,000 on 90 days D/A

OVERALL PERFORMANCE

P.T. HIJAU LESTARI RAYA FIBERBOARD (P.T. HLRF) was established in Palembang, South Sumatera on 28 June 2007. Founder and shareholding of the company are EVERGREEN FIBREBOARD BERHARD of Malaysia (51%) with P.T. HUTRINDO JAYA FIBREBOARD MANUFACTURING COMPANY (46%) and P.T. UFORIN PRAJEN ADHESIVE INDUSTRY (3%), both are private national company. The company was founded with an authorized capital of US$ 8,000,000 issued capital of US$ 4,200,000 entirely paid up. The company notary deed was made Mrs. Misahardi Wilamarta, SH., a public notary in Jakarta and was approved by the Ministry of Law and Human Rights in its decision letter No. W7-08672.HT.01.01.TH.2007 dated August 3, 2007. Later in August 2008 the board of directors and the board of commissioners reappointed to lead and runs of the company’s operation (see profile of this report). The latest revision of notary documents was made by Mrs. Misahardi Wilamarta, SH., and was approved by the Ministry of Law and Human Rights in its decision letter No. AHU-56713.AH.01.02.TH.2008 dated August 29, 2008.

We observe the local partners namely P.T. HUTRINDO JAYA FIBREBOARD MANUFACTURING COMPANY is a private national company dealing with investment holding and majority shareholder is controlled by Mr. Ir. Akie Setiawan AKA Kho Teng Kie (98.33%) and Mr. Jimmy Sumarko Kho (1.67%). Besides, P.T. UFORIN PRAJEN ADHESIVE INDUSTRY is a private national company and majority shareholder is controlled by Mr. Ir. Akie Setiawan AKA Kho Teng Kie (90.67%) and Mr. Bambang Yogianto Basoeki Rachmat (9.33%). Mr. Ir. Akie Setiawan is a founder and top figure of the MANUNGGAL SEMPURNA Group, a developing business group dealing with assembling of electronic household appliances, ceramic tile manufacturing, shrimp culture and marine products processing, medium density fiberboard manufacturing and phenol formaldehyde manufacturing.

P.T. HIJAU LESTARI RAYA FIBREBOARD (P.T. HLRF) operates under the framework of Foreign Investment (PMA) facility to deal with medium density fibreboard, phenol and urea formaldehyde manufacturing by taking over factory and factory employee of P.T. P.T. HUTRINDO JAYA FIBREBOARD MANUFACTURING COMPANY and P.T. UFORIN PRAJEN ADHESIVE INDUSTRY. The plant located at Desa Pematang Palas, Kecamatan Banyuasin, Kabupaten Banyuasi, South Sumatera, where it stands on a land of some 10.8 hectares landsite. After the taking over of the above company, P.T. HUTRINDO JAYA FIBREBOARD MANUFACTURING COMPANY and P.T. UFORIN PRAJEN ADHESIVE INDUSTRY now only operating as investment holding (as the local partners) of P.T. HIJAU LESTARI RAYA FIBREBOARD (P.T. HLRF).

According to the license of the Capital Investment Coordinating Board (BKPM) No. 770/I/PMA/2000 dated 18 June 2007 that the company will be produce medium density fibreboard of 120,000 cubic meters, phenol formaldehyde of 30,000 tons and urea formaldehyde of 45,000 tons respectively per annum. The construction of the company has absorbed an investment of US$ 25.0 million, come from owned capital of US$ 4.2 million and the rest from loans. Mr. Warsono, general affairs manager of the company disclosed that the company has been commercial operation since February 2008. Some of 85% of medium density fibreboard is exported to Singapore, Hong Kong, Middle East and the remaining some 15% to be sold in the country to various furniture industries, electronic household appliances industries and speaker boxes industries and design interior companies. Meanwhile the whole phenol formaldehyde and urea formaldehyde products marketed locally. However since November 2010 the company has been ceased operation for 3 month due to the damages of machineries. Since the early 2011 the plant back in operation. According information from Environmental Pollution Control Agency (Bappedal) that the factory pollute the surrounding environment. We observe the operation of P.T. HLRF has been growing and developing well in the last three years.

Generally, demand for processed wood including medium density fiber (MDF) has been fluctuating in the last five years in line with the fluctuating export and domestic markets. It is estimated that the demand will kept on rising in the coming two-three years. Meanwhile, the competition is very tight on account of lots of similar companies operating in the country. The woodworking industry had been turning down within the last five years due to lack of raw materials, as far from transportation facility and fluctuation of export demand. It is estimated will keep going down within the coming two or three years as the impact of global economic crisis and tight banking liquidity since October 2008 hitherto. The business position of P.T. HLRF is appraised to be facing difficulty for lack of basic materials in future. The growth of said business is evident from the production and utility growth of the processed wood export volume and export value of plywood and sawn timber below:

The Export Growth of the Indonesian Main Processed Wood Products

2005 – 2009

Type of Commodities	2005	2006	2007	2008	2009
Plywood : -Volume (000 tons) -Value (US$ million)	2,214.8 1,374.7	1,979.1 1,506.6	1,754.2 1,524.7	1,659.3 1,527.2	1,430.4 1,189.5
San Timber: -Volume (000 tons) -Value (US$ million)	371.7 281.6	474.5 414.8	151.0 144.1	51.1 55.6	36.4 36.7
Other Wood Products: -Volume (000 tons) -Value (US$ million)	2,143.5 1,430.2	1,926.2 1,403.4	1,713.0 1,409.0	1,059.3 1,238.2	1,201.4 1,048.8

Source: Central Bureau of Statistics (BPS)

Until this time P.T. HLRF has not been registered with Indonesian Stock Exchange, so that they shall not obliged to announce their financial statement. The management of P.T. HLRF is very reclusive towards outsiders and rejected to disclose its financial condition. We observed that total sales turnover of the company in 2008 amounted to Rp. 135.0 billion rose to Rp. 145.0 billion in 2009 increased to Rp. 153.0 billion in 2010 and projected to go on rising by at least 4% in 2011. The operation in 2010 yielded an estimated net profit of at least Rp. 13.8 billion and the company has an estimated total networth of at least Rp. 90.0 billion. We observe that P.T. HLRF is supported by foreign partner with has financially strong and sound behind it. So far, we did not heard that the company having been black listed by the Central Bank (Bank Indonesia). The company usually pays its debts punctually to suppliers.

The management of P.T. HLRF is led by Mr. Kuo Jen Chang (48) a businessman and professional manager of Singapore with experience in medium density fibreboard manufacturing and trading. Daily operation he is assisted by Mr. Erik Setiawan (40) as Vice President Director and two directors namely Mr. Kuo Jen Chiu (45) and Mr. Francis Lee Choon Hui (66). The company's management is handled by professional staff in the above business. They have wide relations with private businessmen within and outside the country. So far, we did not hear that the management of the company being filed to the district court for detrimental cases or involved in any business malpractices. The company’s litigation record is clean and it has not registered with the black list of Bank of Indonesia. P.T. HIJAU LESTARI RAYA FIBREBOARD is sufficiently fairly good for business transaction.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.09
UK Pound	1	Rs.72.82
Euro	1	Rs.63.43

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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