Revenue recovery, lower capex to drive Genting’s deleveraging, says Fitch

KUALA LUMPUR (Nov 9): Genting Bhd (BBB/Stable) and its subsidiary Genting Malaysia Bhd (GenM, BBB/Stable) should generate positive free cash flow (FCF) over 2022-2024, allowing them to cut leverage by around one times during the period, according to Fitch Ratings.

In its Spotlight: Genting Berhad report released on Tuesday (Nov 8), the rating agency said its rising revenue and earnings before interest, taxes, depreciation, amortisation and rent/restructuring (Ebitdar) estimates for Genting and GenM incorporate receding Covid-19 risks and the easing of preventive restrictions across key markets.

“We expect a slower — but steady — Ebitdar recovery in Singapore than in Malaysia and the US, due to a higher dependence on foreign visitors and the hit from an increase in gaming tax from 2Q2022 (second quarter of 2022),” it said.

Fitch forecasts Genting’s 2022-2024 capex to be less than half of its spend over 2018-2021, due to lower investment in Malaysia and the US.

“However, we have not factored in potential new casino licences, due to significant uncertainties,” it said.

Genting’s share price slipped four sen or 0.9% to settle at RM4.42 for a market capitalisation of RM17.14 billion.