Fitch: Genting Malaysia to reduce debt gearing by 2024

Fitch expects a robust recovery in Genting Malaysia’s markets and lower capital spending.

Malaysia.- Fitch Ratings has reported that it expects Genting Malaysia Berhad to reduce its debt gearing against EBITDA from 4.2x in 2021 to 3.2x by 2024. The agency says the deleveraging will stem from the group’s economic recovery in the markets where it operates and lower capital spending.

Fitch analysts Akash Gupta and Shiv Kapoor stated: “Following the lifting of pandemic-related restrictions in Malaysia in April 2022, recovery should be aided by a limited reliance on foreign visitors and additions to the new Genting SkyWorlds theme park by fourth-quarter 2022.”

Genting Malaysia’s revenue from Malaysia, which accounted for 70 per cent of its pre-pandemic consolidated total revenue, is expected to recover to over 75 per cent of 2019 levels this year and to around 95 per cent by 2023, according to the rating agency. The group also runs casinos in the United States, the Bahamas, the United Kingdom and Egypt.

Genting Malaysia reported that revenue was up 166 per cent year-on-year to MYR2.18bn (US$486.5m) in the second quarter. The company said the improvements were primarily due to an overall higher volume of business at Resorts World Genting (RWG) as a result of the eased travel restrictions in the country. 

In September, analysts upgraded Genting Malaysia’s long-term Issuer Default Rating (IDR) from “negative” to “stable”. Fitch stated that Genting Malaysia saw a stable outlook driven by a strong recovery of gaming revenue, particularly in Malaysia and the US after Covid-19 restrictions were eased. The credit rating agency also affirmed Genting’s issuer default ratings at BBB.

Lower expectations for Genting Singapore

As regards Genting Singapore, analysts at Fitch Ratings stated: “We expect a slower – but steady – EBITDAR recovery in Singapore, than in Malaysia and the U.S., due to a higher dependence on foreign visitors and the hit from an increase in gaming tax from second-quarter 2022.”

The ratings agency added that Genting Singapore’s 2022 revenues are likely to remain 35 per cent below pre-pandemic levels.