Genting Singapore EBITDA to reach US$443m in 2022, analysts say

Moody’s says Genting Singapore’s credit metrics will remain strong, thanks to its net cash position.

Singapore.- Analysts at Moody’s Investors Service have issued their credit opinion on Genting Singapore’s outlook for the rest of the year. They expect the casino operator’s earnings to improve as the Singapore casino market recovers from the Covid-19 pandemic.

They said Genting Singapore’s earnings before interest, taxation, depreciation and amortisation (EBITDA) would increase to about SGD630m (US$443.0m) in 2022 and SGD930m in 2023. This would reflect a continued recovery in operating performance following the lifting of border restrictions in April this year. However, earnings are unlikely to return to 2019 levels until 2024-25.

Moody’s noted that Genting Singapore relies on Singapore’s tourism industry. Visitor numbers in August 2022 remain at around 40 per cent of 2019 levels. Meanwhile, the company faces utility and labour costs, as well as increased casino tax rates since March 2022.

The agency said Genting Singapore’s credit metrics will remain strong thanks to its net cash position. The company will be debt-free following the maturity of its SGD206m Japanese yen-denominated bonds in October.

However, the company’s credit quality is constrained by its parent company, Genting Berhad. The rating agency noted that Genting Singapore has historically been the largest contributor to Genting Berhad and holds the majority of the group’s consolidated shares in cash. Genting Singapore has an issuer rating of ‘A3’, considered “low credit risk.”

The casino operator will invest SGD4.5bn in the expansion of Resorts World Sentosa as part of the extension of its casino licence to 2030. The expansion plan will cover 1,200 units across its three hotels: Hard Rock Hotel Singapore, Hotel Michael and the Festive Hotel.

The company is expected to invest SGD1.4bn over the next 18 months. Moody’s said that given Genting Singapore’s sizable net cash position, it may have sufficient resources to fund expansion without incurring additional debt.

For the first half of the year, Genting Singapore reported a rise in gaming revenue of 7.3 per cent year-on-year to nearly SGD475.2m. The company reported that net profit fell by 4.3 per cent year-on-year to SGD84.4m (US$61.3m) while revenue was up 19.5 per cent to SGD663.1m.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) came in at SGD268.7m, down 2.7 per cent year-on-year. Non-gaming revenue rose 64.9 per cent to just under SGD183.0m.