Malaysian gaming giant Genting Berhad is forecast to see its net debt increase to more than RMB25 billion (US$6 billion) over the next three years, up from around RMB17.9 billion (US$4.3 billion) at end-2023, due to significant capex projects from subsidiary Genting Singapore and the group’s Oil & Gas segment.
The increase would, however, still see gearing remain within current ratings thresholds according to RAM Ratings, which this week affirmed the AA1/Stable/P1 ratings of Genting Berhad and Genting Malaysia Berhad.
In a note, the Malaysia-based ratings agency said it expects the group’s debt to increase by over RMB7 billion (US$1.68 billion) in the next three years, mainly due to the SG$6.8 billion (US$5 billion) expansion of Genting Singapore’s Resorts World Sentosa plus investment into a new US$963 million floating liquefied natural gas vessel.
“As such, net debt is forecast to steadily increase to above RMB25 billion over the same period, with net gearing potentially to rise towards 0.45 times and FFO net debt coverage to weaken to about 0.35 times,” said analysts Ben Inn and Thong Mun Wai. “These metrics are still within its current rating thresholds.”
The analysts also pointed to the fact that the group’s ratings continue to be supported by Genting’s solid market position, with geographically diversified gaming businesses that include a monopolistic position in Malaysia, duopoly in Singapore and a leading video gaming machine operator in north-eastern US.
The plantation, power generation, property and oil and gas businesses also afford the group some degree of diversification, they noted.
“Over the next three years, we anticipate Genting’s operating performance to stay on the current uptrend and supportive of the ratings despite rising net debt levels.”
Once area of concern are the company’s regulatory issues in Nevada, where the Nevada Gaming Control Board has filed allegations that the company failed to fulfill its responsibilities as a holder of a privileged Nevada gaming license by allowing individuals with suspected or proven ties to illegal activities to gamble at Resorts World Las Vegas (RWLV).
“The NGCB is seeking disciplinary action including fines and/or suspension or revocation of RWLV’s gaming licence,” RAM Ratings said.
“In our view, the Commission’s eventual decision could impact Genting to a significant extent, especially if its licence is affected. The Group has avenues to respond to the allegations, reach a settlement or request a hearing. We will assess any potential impact of this event risk on Genting’s ratings when more information becomes available.”
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