RAM Ratings has reaffirmed the corporate credit ratings of Genting Malaysia Berhad at AAA and Stable, as well as the AAA and Stable rating of its proposed RM5 billion ($1.3 billion) medium-term notes programme, to be issued by Genting Malaysia’s wholly-owned subsidiary, GENM Capital Berhad.
The ratings firm said Genting Malaysia’s credit profile is supported by its position as the only casino operator in Malaysia via Resorts World Genting. RWG contributes a respective 70 percent and 80 to 90 percent of Genting Malaysia’s yearly revenue and operating profit before depreciation, interest and tax, and is key to the group’s strong and stable cashflow.
“RWG’s strong domestic operations and predominantly mass-market customers minimise earnings volatility. Further, the Group has an established operating track record overseas. It is one of the leading casino operators in the UK and its slot operation in New York is the highest-grossing in the US Northeast.”
RAM said that, backed by its gaming business, Genting Malaysia generates strong operating cashflow.
“The group has remained in a net-cash position for the last 5 years, supported by operating cashflow that has generally stayed above RM1.5 billion during the same period.”
Kevin Lim, RAM’s Head of Consumer and Industrial Ratings. said, “Moving forward, we anticipate Genting Malaysia’s financial profile to remain strong, despite expected significant increases in debt load.”
The ratings, meanwhile, are moderated by the group’s exposure to regulatory risk, its aggressive expansion strategy and the execution risks that its expansion entails. The gaming industry, owing to its sensitive nature, faces regulatory controls that may evolve over time.