Fitch Ratings says in a new note that it has raised its revenue forecasts for Genting Malaysia’s flagship Malaysian integrated resort, Resorts World Genting, to reach 100% of pre-COVID levels by 2025.
The forecast was provided in a Thursday note in which the ratings agency said had affirmed the company’s Long-Term Issuer Default Rating (IDR) at ‘BBB’ with a stable outlook. The ‘BBB-’ IDR of Genting Malaysia’s wholly owned subsidiary, Genting New York LLC, and the ‘BBB-’ rating on Genting New York LLC’s recently announced US$625 million senior unsecured notes due 2029, remain on Rating Watch Negative (RWN), it added.
While Fitch expressed some concerns over Genting Malaysia’s exposure to one of its US entities, Empire Resorts, which controls the struggling Resorts World Catskills property, it has no such worries in Malaysia where consolidated revenue grew by 14% year-on-year in the first half of 2024.
“As a result, we [have] raised our revenue forecast for 2024 and 2025 to up to 100% of the 2019 level,” Fitch said. “We expect higher revenue on a domestic traffic rebound and increase in international tourists as regional travel continues to recover, helped by the completion of repairs to an access road to Genting Highlands in July 2024.”
The agency also said it expects Genting Malaysia’s net leverage to fall from 4.0x in 2023 to around 3.0x by 2026 on higher EBITDA growth, and to remain below 3.5x even with increased capex should the company win one of three full casino licenses on offer in downstate New York for expansion of its Resorts World New York City.
Genting New York LLC, Fitch added, will remain on Rating Watch Negative until it is confirmed that it has either won or been ruled out of a full-scale casino licence in downstate New York.
“A licence would also boost Genting Malaysia’s geographic diversification and potentially lower the tax on Genting New York LLC’s gross gaming revenue from around 65% currently,” it said.
“We have not incorporated a licence win in our forecasts, given the uncertain bidding process. However, should Genting New York LLC be successful, we do not think there will be any impact on Genting Malaysia’s SCP (Standalone Credit Profile) or IDR, or on [parent] Genting Berhad.
“We expect Genting’s and Genting Malaysia’s net leverage ratios to remain below 3.5x, even with the increase in capex following a casino licence win. Genting Malaysia’s net leverage may temporarily exceed 3.5x during the construction period, but we do not anticipate a sustained impact on Genting’s and Genting Malaysia’s financial profile and IDRs.”
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