Fitch Ratings has revised its revenue expectations for Genting Malaysia, operator of Resorts World Genting in Malaysia, casinos in New York, and Europe. The adjustment, which sees a 5% reduction on average for 2023 and 2024, is attributed to the slower-than-expected recovery observed in the first half of this year.
Despite this revision, Fitch maintains Genting Malaysia’s Long-Term Issuer Default Rating (IDR) at “BBB” with a stable outlook. Additionally, it affirms a “BBB” rating on the company’s US$1 billion (RM4.69 billion) unsecured notes due in 2031. These ratings are bolstered by a positive domestic outlook and support from its more diversified parent company, Genting Bhd.
Fitch describes Genting Malaysia’s IDR as “equalized” by its stronger parent company, in which it holds a 49% stake. However, revenue for 2022 and the first half of 2023 from Resorts World Genting in Malaysia, which contributes over 60% of Genting Malaysia’s consolidated revenue, fell below expectations. This was primarily due to factors such as heavy rainfall at the beginning of 2023 and a landslide in late 2022, affecting access to the resort.
As a result, Fitch has adjusted its revenue expectations for 2023 and 2024 to around 90% to 95% of the 2019 level, down from the previous estimate of around 95% to 100%. The agency anticipates revenue growth driven by a gradual increase in domestic traffic and higher international tourist numbers, supported by expected repairs to the access road by the first half of 2024.
While Genting Malaysia’s ratings remain unchanged, Fitch has placed the “BBB-” IDR of its wholly owned subsidiary, Genting New York LLC, and the “BBB-” rating on its US$525 million senior unsecured notes due in 2026 on Rating Watch Negative (RWN). This move reflects the risk associated with not winning a full-scale casino license in downstate New York, where the bidding process is ongoing.
Fitch noted that if Genting does secure a full New York license to add table games at Resorts World New York City, this could lead to several advantages, including access to a larger market and potentially lower tax rates on gaming revenue.
Overall, Genting Malaysia’s rating is closely tied to Genting’s IDR due to significant strategic and operational incentives for support. Fitch expects Genting Malaysia to continue contributing over 30% of Genting’s proportionately consolidated Ebitdar (earnings before interest, taxes, depreciation, amortization, and rent/restructuring), and the operational incentives are reinforced by factors such as the common Resorts World brand and substantial management overlap.