KUALA LUMPUR: S&P Global Ratings today said Genting group of companies have recovered from effects of the pandemic, with earnings expected to grow further albeit gradually.
S&P affirmed the issuer credit ratings on Genting Bhd, Genting Malaysia Bhd, Genting New York LLC, and Resorts World Las Vegas LLC, with a stable outlook.
The ratings agency said in a statement that Genting Bhd's improving credit quality is likely to continue amid robust earnings and limited spending.
Its operations recovered and surpassed prepandemic levels, with 2023 revenue and earnings before interest tax depreciation and amortisation (ebitda) reaching 125 per cent and 112 per cent of 2019 levels, respectively.
This was driven by operational improvements in all its geographies, including Malaysia, Singapore.
The U.S. Resorts World Las Vegas also continued to ramp up its flagship asset at the Las Vegas Strip, in which S&P suspects revenue contribution to the group to have been around 15 per cent.
Genting Bhd's capital expenditure (capex) has remained limited since 2022, and S&P expects positive discretionary cash flows to continue through 2025. This should result in the company's ratio of funds from operations (FFO) to debt improving to 38 per cent-40 per cent by 2025 from 30 per cent in 2023.
"We believe the group's operating cash flows are sufficient to meet the investment plans for the group companies over the next two years. However, any additional large investments to expand the geographical footprint could affect Genting Bhd.'s deleveraging," S&P said.
This could change however should the group win the full casino license in downstate New York.
"We believe winning a full license can solidify the group's competitive position in the New York gaming market. The group is likely to invest US$5 billion, with the market watchers expecting the license to be awarded sometime in 2025," S&P said.
It believes the incremental earnings from the new license will be an important ratings driver for the group.
Given the low visibility and progress of the license bidding however, S&P does not reflect investments or incremental earnings related to the gaming license into its base case.
S&P continues to believe that Genting Bhd will provide strong long-term support to its group companies, Genting Malaysia, Resorts World Las Vegas, and Genting New York, even under stressed conditions.
This is mainly due to their strategic importance to the group's branding (Resorts World and Genting) and operations.
S&P sees Genting Malaysia as a core subsidiary of Genting Bhd because it is integral to the group's business and strategy.
Resorts World Las Vegas and Genting New York are seen as highly strategic subsidiaries, owing to their strategic importance to the group's expansion strategy in the U.S.
While, Genting New York's and Resorts World Las Vegas's less significant ebitda contributions to the group limit their group status when compared with Genting Malaysia.
S&P expects Genting New York and Resorts World Las Vegas will receive support under almost all foreseeable circumstances, because any financial distress in these companies will have significant implications for Genting group's reputation and global standing with gaming regulators.