Genting Group’s Post-Pandemic Recovery and Bright Outlook
S&P Global Ratings today confirmed a positive trajectory for the Genting group of companies, indicating a robust recovery from the pandemic’s impact and a promising path to further earnings growth. The firm affirmed stable issuer credit ratings for key components of the group: Genting Bhd, Genting Malaysia Bhd, Genting New York LLC, and Resorts World Las Vegas LLC.
Financial Performance and Projections
The recovery of Genting Bhd has been notably strong, with 2023 revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) reaching 125% and 112% of the 2019 levels, respectively. This resurgence is attributed to operational enhancements across its various global locations, including Malaysia and Singapore, and significant contributions from its U.S. operations, particularly the Resorts World Las Vegas. This flagship asset on the Las Vegas Strip is believed to contribute around 15% to the group’s revenue.
Capital Expenditure and Cash Flow
Genting Bhd has maintained limited capital expenditure since 2022, which S&P anticipates will support continued positive discretionary cash flows through 2025. This fiscal prudence is expected to improve the company’s ratio of funds from operations (FFO) to debt from 30% in 2023 to between 38% and 40% by 2025.
Investment Plans and Potential Risks
While the group’s operating cash flows are deemed sufficient to meet investment plans for the next two years, S&P warns that any substantial new investments aimed at expanding geographical reach might impede Genting Bhd’s deleveraging efforts. However, a potential game-changer could be the acquisition of a full casino license in downstate New York, anticipated possibly by 2025. The license could see Genting investing up to US$5 billion, significantly boosting the group’s competitive stance in the New York gaming market and serving as a crucial ratings driver.
Strategic Importance of Subsidiaries
Genting Malaysia is viewed as a core subsidiary, integral to the group’s overall business and strategic direction. Meanwhile, Resorts World Las Vegas and Genting New York are identified as highly strategic, reflecting their crucial roles in Genting’s U.S. expansion efforts. Despite their currently smaller EBITDA contributions compared to Genting Malaysia, these entities are expected to receive ongoing support to preserve the group’s reputation and its standing with global gaming regulators.
Long-Term Group Support and Outlook
S&P remains confident in Genting Bhd’s commitment to supporting its subsidiaries under most circumstances, reflecting the strategic importance of the Resorts World and Genting brands to the group’s global operations. This backing is crucial, particularly for maintaining the group’s market position and navigating regulatory environments.
In conclusion, as Genting continues to build on its post-pandemic momentum, the group’s strategic investments and prudent financial management are set to solidify its position in the global market while enhancing its financial stability and shareholder value.
