PETALING JAYA: There is now “high” risk of rating downgrades for Genting Bhd
and Genting Malaysia Bhd (GenM), following Genting’s RM3.1bil acquisition of additional shares in GenM, according to CreditSights.
Genting currently owns 73.13% of GenM. Its recently concluded takeover bid garnered an additional 23.13% stake at RM2.35 per share, falling short of the 75% threshold required to trigger delisting from the stock exchange.
CreditSights said Genting’s increased stake in GenM, coupled with its commitment to support GenM’s new casino build in New York, could meaningfully worsen Genting’s credit metrics, increase its debt load, and heighten rating-downgrade risks.
“We now see a high likelihood of rating downgrade risk for Genting at Moody’s and Fitch (Baa2/BBB), and for GenM at Fitch (BBB).
“On a pro-forma basis from the nine-month 2025 numbers, Genting would have breached all downgrade trigger ratios at Moody’s and Fitch,” it stated.
CreditSights has maintained its “market perform” recommendation on Genting and “outperform” recommendation on GenM.
Meanwhile, several other analysts have maintained their “hold” rating on GenM, stating that they have not factored in any contributions from a potential new US licence.
Phillip Research said any positive earnings are expected to be offset by startup and financing costs for the new downstate New York development in the first few years of operations.
The group’s Genting New York LLC has been chosen by the New York Gaming Facility Location Board to advance to the final licensing review stage with the New York State Gaming Commission.
The board is expected to finalise and announce the issuance of licences by Dec 31.
“We continue to see Genting as one of the main beneficiaries of Visit Malaysia 2026 and see long-term potential from the new downstate New York casino licence.
“Key risks include higher/lower-than-expected win rates, a hike/reduction in gaming taxes, lift/drag from key associates, and value/destructive related-party transactions,” Phillip Research told clients in a report.
It noted that GenM is currently undergoing the mandatory security, fitness and background checks required for its New York casino licence.
Operationally, Resorts World New York City (RWNYC) has begun closing certain casino areas in the third quarter of this year to allow for the expansion of its gaming facilities.
The upgraded areas are now expected to reopen by March 2026, ahead of the previously guided June timeline, which Phillip Research said may provide earnings upside.
Meanwhile, TA Research said GenM’s nine-month core profit for the period ended Sept 30, 2025 (9M25) of RM446.1mil beat its expectations but was in line with consensus forecast.
The variance was largely due to higher-than-expected hold percentage at its Malaysian casino operations.
The research house told clients it was raising its earnings projections for financial year ending Dec 31, 2025 (FY25) and FY26 by 6.6% to 48.9% after factoring in higher win rates for its Malaysia casino segment.
However, it cut FY27 earnings projections by 18.8% after revising its ringgit assumptions to US$4.10 and £5.20.
On the new casino licence in downstate New York, TA Research said the chance of GenM securing the licence is high after MGM Resorts withdrew its bid.
“Upon receiving the licence at end-December, GenM will rejuvenate this brownfield development and is expected to start offering table games on July 1.
“It will have first-mover advantage, as the other two bidders are embarking on new resort projects,” it said.
However, it added that it remains cautious pending further details on the casino tax structure and licence validity period.
Public Investment Bank said it was maintaining its “trading buy” call on GenM in view of the potential near-term catalyst of securing a casino licence in downstate New York. At last look, GenM was at RM2.19, down six sen.
The Genting group submitted its formal proposal for the New York licence in June, putting forward a US$5.5bil (around RM23.2bil) plan to convert RWNYC from a racino into a full-scale integrated resort.
