PT Express Transindo Utama Tbk (TAXI) said it will hold off its expansion to cope with economic conditions and competition. This decision was based on the fact that TAXI’s debt is very large and because the company will only get in deeper trouble if it will continue the expansion.
The total liability of TAXI on March 31, 2016 reached Rp1,91 trillion, Rp1,48 trillion of which is long-term debt, particularly bonds and long-term bank debts. With total assets of only Rp2,82 trillion, the company’s total liability is already quite large. Consequently, the financial burden to be paid by TAXI at the first quarter amounted to Rp45,14 billion, or 21% of the total revenue it receives. As a result, TAXI suffered a net loss of up to Rp9,84 billion.
It is expected for TAXI to hold off the expansion this year. The higher the debt the company has, the more vulnerable the company is, and the industry becomes less profitable. Hence, TAXI shares have been very distressed as its value fell from its peak in 2013 amounting to Rp1.950 to only Rp165 in today’s trading session.
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