The stable credit rating of Genting Bhd, the Malaysia-listed parent of a group of casino businesses around the world, is partly due to the fact its capital expenditure (capex) “has remained limited since 2022,” says S&P Global Ratings, in a Tuesday memo.
That was against a backdrop where the group’s existing business was at levels exceeding 2019’s pre-pandemic performance.
S&P affirmed Genting Bhd’s issuer credit rating at ‘BBB-/Stable’.
“In view of the group’s limited spending ahead, we expect [Genting Bhd’s] credit quality to improve over the next two years, barring any negative outcome of the New York gaming licence” process, a market for which it is “currently bidding,” stated the ratings institution.
If the Genting group wins a downstate New York licence – an adjudication S&P said is expected in 2025 – then the ratings house anticipates the brand would be likely to invest US$5 billion, as previously announced by the casino group.
Genting Bhd group’s operations had “recovered and surpassed pre-pandemic levels, with 2023 revenue and EBITDA [earnings before interest, taxation, depreciation and amortisation] reaching 125 percent and 112 percent of 2019 levels, respectively,” stated S&P.
“This was driven by operational improvements in all its geographies, including Malaysia, Singapore, and the U.S.,” it added.
The group’s Resorts World Las Vegas property in Nevada, in the U.S., had “continued to ramp up,” and S&P estimated its revenue contribution overall “to have been around 15 percent”.
The institution describes Genting Bhd as the parent and managing entity of the Genting group, with leisure and hospitality contributing 85 percent to 90 percent of EBITDA in pre-pandemic years.
S&P said the group’s two “key” assets were Resorts World Genting, the sole gaming property in Malaysia, and Resorts World Sentosa, a gaming resort in Singapore’s duopoly casino market.
The Singapore-listed Genting Singapore Ltd, operator of Resorts World Sentosa, is pledged to invest SGD6.80 billion (US$5.0 billion) to upgrade and expand the complex.
Genting Singapore posted annual net profit of nearly SGD611.6 million for 2023, up 79.8 percent from the prior year.
In the U.S., Genting group acquired a 49 percent stake in upstate-New York casino operator Empire Resorts Inc in 2019. In June 2021, Genting group launched the US$4.3-billion Resorts World Las Vegas integrated resort.
The group also wholly owns Genting New York LLC, operator of its current downstate gaming operation Resorts World New York City, via the group’s Genting Malaysia Bhd entity.
S&P also gave in its Tuesday update an analysis of risk for the Genting group’s subordinate issuers.
As of December 31, Genting Malaysia’s capital structure consisted of about MYR2.4 billion (US$503.4 million) of secured debt, and MYR11.6 billion of senior unsecured debt. Of the unsecured debt, MYR2.6 billion was issued at the subsidiary level.
S&P rates Genting Malaysia’s issuer credit rating as the same as the parent, i.e., ‘BBB-/Stable’. In 2023, Genting Malaysia posted a net profit of MYR360.8 million, compared to a net loss of MYR667.4 million in the prior year.
Overall, says S&P, the ratings on Genting Malaysia, Resorts World Las Vegas LLC, and Genting New York are tied to that on Genting Bhd.
“We continue to believe Genting Bhd will provide strong long-term support to these group companies, even under stressed conditions. This is mainly due to their strategic importance to the group’s branding (Resorts World and Genting) and operations,” stated S&P.
