Fitch Ratings Inc says the development of several large scale projects could hurt Genting Bhd’s finances. The Malaysia-based company, which Fitch describes as “prudent”, is expanding into the U.S. market and to other Asian markets through its Singaporean subsidiary Genting Singapore Plc.
“The simultaneous execution of other large scale projects by the group like in Las Vegas and potentially Japan could strain Genting’s financial profile,” Fitch said in a report on Friday. “However we note that the group has a history of pursuing expansion prudently,” it added.
Genting is currently waiting for all relevant official licences from Nevada gaming regulators to start building its US$4billion Resorts World Las Vegas. The casino operator is also in the running for a gaming licence in upstate New York.
Meanwhile, Genting Singapore is partnering with mainland China developer Landing International Development Ltd to build a US$2.2 billion casino resort in South Korea’s Jeju Island. The company has reportedly delayed the groundbreaking that was scheduled for June 24.
Genting Singapore has also incorporated several subsidiaries in Japan, anticipating the passage of that country’s Casino IR [Integrated Resorts] Bill to legalise casinos.
Fitch on Friday maintained Genting and Genting Singapore’s long-term rating at ‘A-’, with a stable outlook.
“Genting’s ratings reflect its continued strong market position in the Malaysian and Singaporean gaming markets, its robust and improving operating margins, and low net financial leverage,” Fitch said.
Genting’s overall business risk is lowered by its industry diversification into plantations and power sectors, the agency said. But it said Genting Singapore’s standalone rating would be ‘BBB’, primarily due to its single-market exposure.
Genting said on May 30 its first-quarter net profit surged 25 percent to 497.5 million ringgit (US$154.8 million) compared with 397.8 million ringgit a year earlier. Revenue rose 20 percent to 4.69 billion ringgit, due to higher volumes in its gaming business, the company said.
“Genting’s low net leverage, with negative net external debt on a consolidated basis which was negative 0.21x in FY13, supports its rating,” Fitch said. While this will rise as the group embarks on new projects, the rating agency said it expects Genting’s “credit metrics to remain at levels commensurate with its rating”.
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