Driven by the gaming sector’s robust revenue recovery, Fitch Ratings revised Outlooks on Genting Berhad and its wholly owned subsidiaries, Genting Overseas, and Resorts World Las Vegas LLC, to Stable from Negative.
Fitch has also affirmed the IDRs of Genting and Genting Overseas Holdings at ‘BBB’ and Resorts World Las Vegas at ‘BBB-‘.
The Stable Outlooks are driven by the gaming sector’s robust revenue recovery, which is evident in GENT’s 2Q22 results, especially in Malaysia and the US, following receding Covid-19 risks and the easing of preventive restrictions, the firm argues.The rating agency expects revenue from Malaysia, which formed almost 35 percent of Genting Group’s pre-pandemic consolidated total revenue, to recover to over 75 percent of the 2019 level in 2022 and around 95 percent in 2023.
The first half of fiscal 2022 recorded 31 percent of full-year 2019 revenues, following the lifting of pandemic-related restrictions since April 2022.
The robust recovery should be aided by limited reliance on foreign visitors and additions to the new Genting SkyWorlds theme park by fiscal 2022.
The company’s EBITDAR margins benefitted from a sharp cut in the workforce in Malaysia to mitigate the impact of Covid-19, and one of the reasons margins in 2022 and thereafter for the Malaysian operations to remain higher than in 2019, Fitch highlights.
“Rating agency’s margin expectation factors in the impact of wage inflation and spending on marketing and promotional activities to drive revenue growth,” the report read.
The rating agency believes that Genting Group’s proportionately consolidated net leverage ratio is on track, which is consistent with its rating.
The company’s credit profile is supported by its position as the sole casino-license holder in Malaysia, where it benefits from a high share of domestic visitors, and a healthy share in Singapore’s duopolistic market.
The rating also incorporates Genting’s robust diversification in terms of gaming assets in the US and the UK, and cash flows from non-gaming businesses such as palm oil and energy.
Fitch has also affirmed Genting’s senior unsecured debt rating at ‘BBB’ and simultaneously withdrawn the rating because the company is no longer issuing senior unsecured debt, and there is no Fitch-rated debt issued or guaranteed by the company.
The rating on $1.5 billion senior unsecured notes due 2027, which are guaranteed by Genting Overseas Holding Ltd, has been affirmed at ‘BBB’.
The ratings on Resorts World Las Vegas LLC $1.35 billion senior unsecured notes due in 2029 and 2031 and its senior secured credit facilities have been affirmed at ‘BBB-‘.
Genting Overseas Holdings IDR is equalized with Getting parent company, while Resorts World Las Vegas is rated one notch lower.