Revenue at Genting group’s respective casino resorts in Malaysia and Singapore is likely this year to reach “85 percent to 90 percent” of 2019’s pre-pandemic trading period, with recovery to pre-crisis levels by the second half of 2024, says a note from Fitch Ratings Inc.
Genting group’s “key assets in Malaysia and Singapore, which together contributed over 60 percent of group EBITDA [earnings before interest, taxation, depreciation and amortisation] in 2022, saw visitor numbers rebound from April 2022 after pandemic-led restrictions were lifted,” stated Fitch in a Thursday memo.
Genting group’s “workforce reduction in Malaysia should offset wage inflation and allow EBITDAR margins to be better than 2019,” said Fitch.
Malaysia-based Genting Bhd – via its unit Genting Malaysia Bhd – runs Malaysia’s only casino resort, Resorts World Genting. The group also operates the Resorts World Sentosa property in Singapore, via Genting Singapore Ltd.
Fitch stated in its memo: “Singapore EBITDAR margin is unlikely to recover to pre-pandemic levels in the next three years due to the gaming tax increase from second quarter 2022.”
Singapore’s 2022 increases on respective gross gaming revenue tax rates for VIP play and mass-market gambling, were flagged in April 2019, at the time Singapore’s casino duopoly was extended until 2030.
Fitch said it expected the parent Genting Bhd – which it rates as “BBB/Stable” – to see improvement in its leveraging during the course of this year, to 3.5 times, from 4.1 times in 2022.
This was based on the proportionate consolidation of its three listed subsidiaries: Genting Malaysia, which Fitch rates as “BBB/Stable”; Genting Singapore; Genting Plantations Bhd; and the Genting group’s associate Genting Empire Resorts LLC, operator of casino business in New York state in the United States.
Fitch observed that Genting New York LLC, a Genting Malaysia subsidiary that the ratings house assesses as “BBB-/Stable”, might bid for a “full-scale casino licence in New York”. Currently Genting New York runs an electronic gaming venue in the state.
“We expect the group to partly rely on new debt to finance the associated capex [of a potential New York project] such that there is no material impact on its liquidity,” stated the ratings agency.
Fitch said, referring to further liberalisation of the New York state market: “We think the process for the award of three downstate licences, likely to be completed by first-half 2024, will face intense competition among various operators, and Fitch has not yet factored it in Genting Bhd’s forecasts due to significant uncertainty.”
The financial institution said Genting Bhd’s credit profile as group parent was supported by the group’s position “as the sole casino-licence holder in Malaysia, where it benefits from a high share of domestic visitors, and a healthy share in Singapore’s duopolistic market”.
But the institution assigned a “BBB-” rating to a senior secured term loan and revolver-loan facilities of Resorts World Las Vegas LLC, which promotes a property of the same name in Las Vegas, Nevada.
“The term-loan and revolver facilities are secured by substantially all of Resorts World Las Vegas’ existing assets,” said Fitch.
It added: “The proceeds from the secured facilities will be mainly used to refinance a majority of the US$1.25 billion senior secured debt outstanding as of first-quarter 2023.”
Fitch said the Resorts World Las Vegas entity was rated “one notch below its stronger parent, Genting Bhd, given ‘high’ strategic and ‘medium’ operational incentives for the parent to provide support.”
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