S&P Global Ratings stated that the group of companies under the Genting Group are no longer seeing the impact of the pandemic and gradual earnings growth is prevalent.
In a statement on Monday, the rating agency said it expects Genting’s credit quality to improve over the next two years, barring any negative outcome of the New York gaming license, which the group is currently bidding for.
S&P said Genting’s operations recovered and surpassed pre-pandemic levels, with 2023 revenue and EBITDA reaching 125% and 112% of 2019 levels, respectively.
The agency said this was driven by operational improvements in all its geographies, including Malaysia, Singapore, and the U.S. Resorts World Las Vegas also continued to ramp up its flagship asset at the Las Vegas Strip, with revenue contribution to the group to have been around 15%.
S&P said Genting Bhd’s capital expenditure (capex) has remained limited since 2022, and the agency expects positive discretionary cash flows to continue through 2025. It said this should result in the company’s ratio of funds from operations (FFO) to debt improving to 38%-40% by 2025 from 30% in 2023.
“We believe the group’s operating cash flows are sufficient to meet the investment plans for the group companies over the next two years. However, any additional large investments to expand the geographical footprint could affect Genting Bhd’s deleveraging. For example, the group is bidding for a full casino license in downstate New York,” S&P said.
S&P said if awarded, the full license would enhance the group’s presence in the U.S., but it could also mean sizable investments. Outcome of New York gaming license will be key rating factor in future.
S&P added with the group currently bidding for one of the three new casino licenses in the state of New York, the creditworthiness of the group could change with the final outcome of the gaming license.
“We believe winning a full license can solidify the group’s competitive position in the New York gaming market. The group is likely to invest US$5 billion, with the market watchers expecting the license to be awarded sometime in 2025,” it said.
S&P said Genting Bhd will provide strong long-term support to these group companies, even under stressed conditions mainly due to their strategic importance to the group’s branding (Resorts World and Genting) and operations.
“We assess Genting Malaysia to be a core subsidiary of Genting Bhd because we believe it is integral to the group’s business and strategy. We assess Resorts World Las Vegas and Genting New York as highly strategic subsidiaries, owing to their strategic importance to the group’s expansion strategy in the U.S. Genting New York’s and Resorts World Las Vegas’s less significant EBITDA contributions to the group limit their group status when compared with Genting Malaysia.
“However, we believe Genting New York and Resorts World Las Vegas will receive support under almost all foreseeable circumstances, because any financial distress in these companies will have significant implications for Genting group’s reputation and global standing with gaming regulators,” S&P added.
