RAM affirms ratings on Genting, Genting Malaysia

RAM Ratings said the Genting Group has met the thresholds for its ratings a year earlier than anticipated in financial year 2022.

PETALING JAYA: RAM Ratings has affirmed its ratings on Genting Bhd and Genting Malaysia Bhd, underpinned by its expectation that the group’s performance and financial profile will steadily improve over the next three years.

The ratings agency said the Genting Group has met the thresholds for its ratings a year earlier than anticipated in financial year 2022 (FY22).

“Despite the outperformance, we see slightly slower growth ahead, considering more downside risks from the slowdown in key global economies, keen competition and capacity constraints,” it said in a statement.

It added that Genting Group’s revenue of RM22.38bil and operating profit before depreciation, interest and tax of RM7.11bil in FY22 was better than expected.

This was backed by healthier performances from Resorts World Sentosa (RWS), Resorts World New York City and Resorts World Las Vegas (RWLV).

Meanwhile, Genting’s net debt of RM19.66bil as at end-December 2022 was lower than projected, buffered by improved earnings, operating cash flow generation and a slower capital expenditure outlay.

Net debts, cushioned by improving cash flow generation, will not change significantly, RAM Ratings said.

Net gearing and funds from operation net debt cover are anticipated to be a better 0.35 times and 0.45 times, respectively.

Looking ahead, RAM Ratings expects RWS and Resorts World Genting to stay on the recovery path, while key operations in the United States continue to perform well.

“Weak consumer sentiment and higher labour costs will remain concerns for the UK segment,” it said.

RAM Ratings said its ratings continue to be supported by Genting Group’s solid market position, with geographically diversified gaming businesses that include a monopolistic position in Malaysia, a duopoly in Singapore and a leading video gaming machine operator in north-eastern United States.

The commencement of operations at RWLV further enhances its business profile. Plantation, power generation, property and oil and gas businesses also afford the group some degree of diversification.

Genting’s strong liquidity profile is another key rating strength.

As at end-March 2023, the group held RM22.36bil of cash and cash equivalents against short-term debts of RM2.1bil.

Genting Malaysia’s ratings are aligned with the group’s, considering the close relationship of the two entities and anticipated parental support from the group when required, RAM Ratings noted.