S&P: Genting set for a tough 2020

Credit assessment agency, Standard & Poors, expected revenues to drop 25% due to Coronavirus crisis.

Malaysia.- Standard & Poors Global Ratings has published a report suggesting the Genting group will be hit hard by the Coronavirus outbreak, predicting a 25 percent revenue decline for the operator.

In a note delivered to the press, the credit assessment agency said the impact of the deadly virus is expected “to be felt hardest” in the quarter ending March.

“We expect a drastic drop in visitation to gaming properties, and those owned by Genting group are no exception,” it stated.

Regarding Genting’s credit profile, Standard & Poor’s said: “The negative outlook reflects our expectation that Genting will breach our downgrade trigger for the next 12 to 24 months, but its credit profile will recover quickly such that debt/EBITDA falls below 2.0 times by 2022.”

“We revised the outlook on Genting to negative to reflect our view that Genting’s revenue and EBITDA will drop by 20 percent to 25 percent and 25 percent to 30 percent respectively in 2020 because of the ongoing Covid-19 outbreak,” the report said.

The Genting group has a monopoly on casino gaming in Malaysia where it operators Resorts World Genting. It is also active in Singapore’s casino gaming duopoly, through Genting Singapore Ltd.

“In Singapore, we expect revenue to decline by 30 percent to 40 percent in 2020, given our belief that the bulk of it is from customers in North Asia,” explained Standard & Poor’s report.

“In Malaysia, while we acknowledge that day trippers make up about 75 percent of visitors, we forecast weak consumer sentiment amid the virus fear to lower revenue by 20 percent to 25 percent in 2020.”

The Genting group is also developing the US$4.3-billion Resorts World Las Vegas casino resort in Nevada, United States, expected to open in the summer of 2021.

According to Standard & Poors’ forecasts, Genting Bhd’s credit profile should “improve materially from 2022,” after the property opens.

“With the addition of Resorts World Las Vegas from 2021, we forecast revenue and EBITDA to reach record highs in 2022, and Genting’s credit profile to improve materially such that its debt-to-EBITDA ratio will fall below 2.0 times and ratio of funds from operations to debt will stay above 45 percent sustainably thereafter,” S&P noted.