S&P downgrades Genting Bhd due to Covid-19 impact

Genting Malaysia’s Resort World Genting won’t reopen its doors until November.

08/25/21

S&P has downgraded Genting Berhad’s credit rating from “BBB” to “BBB-” amid a rise in Covid-19 cases in Southeast Asia.

Malaysia.- Standard & Poors Global Ratings has downgraded Genting Berhad long-term issuer ratings from “BBB” to “BBB-”.

The credit assessment agency said its outlook had changed due to the impact of the Delta variant of Covid-19, which has triggered lockdowns and heightened social restrictions, materially affecting Genting’s leisure and hospitality operations in Southeast Asia.

Resorts World Genting‘s casino has been closed since May. It closed all of its services in June, after Malaysian Prime Minister announced a nationwide Covid-19 lockdown. Until then, the resort’s hotels, food and beverage outlets, shopping malls, retail outlets and other facilities remained open.

Maybank Investment Bank has predicted that Resort World Genting won’t reopen its doors until November.

Meanwhile, Yokohama may quit Japan’s IR race after Takeharu Yamanaka‘s victory in mayoral elections. Genting Singapore was one of the IR contenders and it was well-positioned to win the competition.

As for an operational recovery of Genting, S&P predicted the group’s earnings before interest, taxation, depreciation and amortisation could reach pre-pandemic levels only in 2023.

Genting Singapore reports net profit of US$65m for H1

Genting Singapore Ltd reported a net profit of SGD88.2m (US$65m) for H1. That compares to a loss of SGD116.7m last year.

The company reported that revenue was up 23.8 per cent to SGD554.8m when compared to the first half of 2020, while gaming revenue in the first half of 2021 came in at SGD442.9m, up 61.4 per cent year-on-year.

The company attributed the growth to the temporary closure of Resorts World Sentosa from April 6 to June 30, 2020 due to the Covid-19 pandemic.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the first half of the year was SGD276.1m, compared to SGD66.7m in the first half of 2020.

Despite the slight increase in casino sales thanks to domestic business after properties reopened, the casino operator remains highly dependant on international tourism. The company has started to develop creative events and promotions for domestic tourists.

Analysts predict Genting Singapore’s revenue will reach SGD1.74bn (US$1.30bn) in 2021, and almost SGD2.11bn in 2022. In 2020, the company reported revenue of SGD69.2m (US$52.1m), down 89.9 per cent year-on-year.