GGRAsia – GEN Sing cash flow to cover capex, dividend: Moody’s

GEN Sing cash flow to cover capex, dividend: Moody’s

Oct 05, 2023 Newsdesk Latest News, Singapore, Top of the deck

Moody’s Investors Service Inc says it expects Genting Singapore Ltd, operator of the Resorts World Sentosa casino complex (pictured) in the Singapore duopoly market, to generate SGD1.4 billion (US$1.0 billion) in operating cash flow “through to December 2024”.

Moody’s added: “This amount, together with the company’s cash balance, will be sufficient to cover projected capital spending of around SGD1.0 billion, an estimated dividend payout of around SGD0.6 billion, and minimal debt repayment.”

According to the ratings agency, Genting Singapore had a “strong net cash position” as of June 30, with a “cash balance of around SGD3.4 billion, compared with lease liabilities of just SGD3 million.”

The institution said its A3 issuer rating for Genting Singapore reflected the company’s 100-percent ownership of Resorts World at Sentosa Pte Ltd., which operates Resorts World Sentosa, “and incorporates our expectation that Genting Singapore will continue to have full access to the cash flow” of the resort.

Genting Singapore has a pledge to the Singapore government to spend SGD4.5 billion on a phased expansion of Resorts World Sentosa, which is commonly referred to as “RWS 2.0”.

According to Moody’s, the casino firm has “sufficient liquidity” to fund the ongoing expansion at Resorts World Sentosa, “without incurring additional debt”.

“We expect the company to incur capital spending of around SGD320 million in 2023 and SGD800 million in 2024,” it added. “While the construction of Minion Land and Singapore Oceanarium is under way, other components of the expansion project are pending government approvals and will likely commence in 2024.”

In its first-half results, Genting Singapore had announced a one-tier tax-exempt interim dividend of SGD0.015 per ordinary share, to be paid on September 22.

Moody’s stated in its Wednesday update, it expected Genting Singapore’s earnings before interest, taxation, depreciation and amortisation (EBITDA) “to rise to around SGD1.1 billion in 2023 and 2024, from around SGD840 million in 2022, as the company benefits from an ongoing recovery in Singapore’s tourism sector”.

From January to the end of August, Singapore recorded 9.01 million visitors, up 204.5 percent year-on-year.

Moody’s noted that Singapore had 1.4 million international visitor arrivals in July 2023, “representing 79 percent of the corresponding month in 2019, before the coronavirus pandemic”.

Though the ratings institution stated: “We do not expect earnings for Genting Singapore to revert to 2019 levels over the next 12 to 18 months, as the company continues to face high utility and labour costs, and increased casino tax rates since March 2022.”