Genting Malaysia is tipped to see revenues at its foundation integrated resort, Resorts World Genting (RWG), return to 95% of pre-COVID-19 levels in 2023, boosted by strong recovery in the domestic market following the easing of COVID-19 restrictions in April, according to ratings agency Fitch.
In a Friday note informing investors it had revised up its Outlook on the Long-Term Issuer Default Ratings (IDRs) of Genting Malaysia Berhad from Negative to Stable, Fitch pointed to the company’s robust gaming-revenue recovery over the last six months, as evidenced by its promising 2Q22 results.
Genting Malaysia saw its revenue more than double to MYR2.18 billion (US$487 million) in the June quarter, including a five-fold increase in revenue from RWG to MYR1.31 billion (US$293 million), with the upward trend set to continue into 2023.
“We expect revenue from Malaysia, which formed almost 70% of the pre-pandemic consolidated total, to recover to over 75% of 2019 levels in 2022 and to around 95% in 2023,” Fitch said, noting that 1H22 had reached only 31% of 2019 levels.
“This follows the lifting of pandemic-related restrictions in April 2022. The recovery should be aided by a limited reliance on foreign visitors and additions to the new Genting SkyWorlds theme park by 4Q22. The UK and US operations also reported higher revenue in 1H22 amid receding pandemic risks and we expect further improvement.”
“Non-gaming revenue constituted 20% to 25% of the total over 2018-2020 and we believe this healthy share will be maintained.”
While revenues are on the way back, Fitch said it expects Genting Malaysia’s EBITDAR margin to remain strong after quickly surpassing 2019 levels in Q2 – aided by a 35% cut in the company’s Malaysian workforce during the pandemic.
“Genting Malaysia does not expect the headcount to return to pre-pandemic levels, despite plans to hire additional staff over the next year,” the agency explained. “We think better operational efficiency and the company’s plan to improve yields will enable its EBITDAR margin to remain above the 2019 level.”