Published on 02 Aug 2023.
RAM Ratings has affirmed the AA1/Stable/P1 ratings of Genting Berhad (Genting or the Group) and Genting Malaysia Berhad (GenM) as well as the issue ratings of their debt programmes.
The affirmation is supported by our expectation that the Group’s performance and financial profile will steadily improve over the next three years. In FY Dec 2022, Genting met the thresholds for its ratings a year earlier than anticipated. 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.
Revenue and operating profit before depreciation, interest and tax of RM22.38 bil and RM7.11 bil, respectively, in fiscal 2022 was better than expected, backed by healthier performances from Resorts World Sentosa (RWS), Resorts World New York City and Resorts World Las Vegas (RWLV) (FY Dec 2021: RM13.53 bil and RM3.15 bil). Operating cost rebasing during the pandemic also benefited earnings. Looking ahead, we envisage RWS and Resorts World Genting to stay on the recovery path while key operations in the US continue to perform well. Weak consumer sentiment and higher labour costs will remain concerns for the UK segment.
Buffered by improved earnings, operating cashflow generation and a slower capital expenditure (capex) outlay, Genting’s net debt of RM19.66 bil as at end-December 2022 was lower than projected (including debts of Genting Empire Resorts LLC; end-December 2021: RM19.73 bil). On the same date, the key metrics of net gearing and funds from operations (FFO) net debt coverage were a robust 0.37 times and 0.35 times, respectively (end-December 2021: 0.37 times and 0.14 times). Up to 2025, we project annual capex of not more than RM4.5 bil – mainly for the rejuvenation of RWS – and yearly dividend payments of up to RM2 bil. Net debts, cushioned by improving cashflow generation, will not change significantly. Net gearing and FFO net debt cover are anticipated to be a better 0.35 times and 0.45 times, respectively.
The ratings continue to be supported by Genting’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 Northeastern US. 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 RM22.36 bil of cash and cash equivalents against short-term debts of RM2.10 bil. GenM’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.
Table 1: Ratings of Genting and GenM
(1) Debt programmes under Genting Capital and Genting RMTN are backed by full, unconditional and irrevocable corporate guarantees from Genting.
(2) Debt programmes under GENM Capital are backed by full, unconditional and irrevocable corporate guarantees from GenM.
(603) 3385 2510
Thong Mun Wai
(603) 3385 2522
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Ratings on Genting Berhad