GGRAsia – Vegas scheme drag on GEN parent amid Covid-19: Nomura

Vegas scheme drag on GEN parent amid Covid-19: Nomura

May 26, 2020 Newsdesk Latest News, Rest of Asia, Singapore, Top of the deck, World

The standalone balance sheet of Malaysia’s Genting Bhd, the parent of a range of casino operating businesses in Asia-Pacific and beyond, is already “weaker” than previously, and the current capital expenditure for its new Las Vegas scheme “poses a drag to its balance sheet” even without the effect of Covid-19 on group operations, said a Friday report from Nomura Group.

The Genting parent said in its latest first-quarter report that it had so far incurred US$2.1 billion, including land costs, on the development of Resorts World Las Vegas, a new casino complex in the Nevada gaming hub in the United States. The company had said the planned total capital expenditure on the scheme was US$4.3 billion.

The note from analysts Tushar Mohata and Alpa Aggarwal reiterated that construction activity has been classified as essential business in Las Vegas and therefore construction on the site had not been halted. Operations at existing Nevada casinos had been paused since March 18, although with a preliminary plan to resume business from June 4, subject to the approval of the Nevada Gaming Control Board.

Resorts World Las Vegas is still due to open in the summer of 2021, according to management, stated Nomura.

Nomura said it had made recent cuts – due to Covid-19 – to earnings forecasts for Genting units Genting Malaysia Bhd, operator of Malaysia’s only casino resort Resorts World Genting, and for Genting Singapore Ltd, operator of Resorts World Sentosa in Singapore.

When combined with “delay in capital expenditure plans and opening of the outdoor theme park in Malaysia to end-2021” the institution now expects the Genting parent to record a “marginal core net loss of MYR29 million [US$6.6 million] in financial year 2020, improving to a profit of MYR1.1 billion to MYR1.3 billion in 2021-2022– i.e., a ‘tick’ shaped earnings recovery,” wrote the analysts.