Asset concentration ups Asian op climate risk: Moody’s

Mar 18, 2022 Newsdesk Latest News, Macau, Singapore, Top of the deck  

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A number of casino businesses with Asian operations faces “moderately negative exposure to physical climate risk,” says a Thursday memo from Moody’s Investors Service Inc. That is because these firms “own just one or a few large integrated resorts”, said the ratings agency.

“They are more exposed to physical climate risks in the few places where their real estate is located, compared with United States-focused companies whose assets are more widely spread across multiple locations and regions,” stated the note.

It mentioned Genting Bhd, the Malaysia-listed parent of a number of casino operating entities. Moody’s also named one of that group’s entities, Genting Singapore Ltd, operator of the Resorts World Sentosa casino resort in Singapore, and additionally identified Las Vegas Sands Corp, which runs Marina Bay Sands in Singapore, and operates casinos in Macau via Sands China Ltd.

Singapore and Macau are coastal locations. Macau is also subject to seasonal tropical cyclones that several times in recent years have brought significant flooding and wrought damage to infrastructure, including casino resorts. One of the most severe recently was Typhoon Hato which struck Macau in August 2017 (pictured).

The Moody’s report also mentioned in the context of “moderately negative exposure” to climate risk the entities Melco Resorts Finance Ltd, SJM Holdings Ltd and Wynn Resorts Finance LLC, entities associated with Macau operators.

The memo on environmental, social and governance risk for casino firms also discussed Hong Kong-listed NagaCorp Ltd, which has a long-term licence casino monopoly in Phnom Penh, the Cambodian capital.

Moody’s said NagaCorp’s exposure to environmental considerations was “highly negative”

The ratings house stated: “This reflects high exposure to physical climate risks because the company’s main asset, the NagaWorld integrated casino and hotel complexes, are concentrated in Phnom Penh, Cambodia which has been subject to droughts and floods.”

Moody’s said that those companies in the gaming sector that were focused in the U.S. had “very highly negative” exposure to “social factors”, reflecting “the ongoing shift in consumer preferences away from traditional casinos to online gaming and sports betting”.

The ratings house considered however that social risk was lower for casino equipment supply firms with U.S. exposure. It mentioned International Game Technology Plc, Scientific Games International Inc and Everi Holdings Inc among them.

Exposure to “customer relations and responsible production” issues was only “moderately negative” for such firms, said Moody’s.

Scientific Games Corp is now trading as Light & Wonder Inc, it said in an announcement following its fourth-quarter and full-year earnings, on March 1.

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