KUALA LUMPUR (July 3): Fitch Ratings sees Genting Bhd facing intense competition among various operators in its bid for a full-scale casino licence in New York.

In a commentary last Thursday (June 29), the rating agency said Genting Malaysia Bhd's (GenM) subsidiary, Genting New York LLC may bid for a full-scale casino licence in New York.

“We think the process for the award of three downstate licences, likely to be completed by 1H2024, will face intense competition among various operators, and Fitch has not yet factored it in Genting's forecasts due to significant uncertainty,” it said.

Revenue to reach up to 90% of pre-pandemic levels in 2023

Separately, it said Genting Bhd’s revenue is expected to reach 85%-90% of 2019 levels in 2023 and pre-pandemic levels in 2H2024.

The rating agency said its key assets in Malaysia and Singapore, which together contributed over 60% of the group's Ebitda in 2022, saw visitor numbers rebound from April 2022 after pandemic-led restrictions were lifted.

It said Genting's workforce reduction in Malaysia should offset wage inflation and allow earnings before interest, taxes, depreciation, amortisation, and restructuring or rent cost (Ebitdar) margins to be better than 2019.

“However, the Singapore Ebitdar margin is unlikely to recover to pre-pandemic levels in the next three years due to the gaming tax increase from 2Q2022,” it said.

Fitch said it estimates Genting's Ebitdar net leverage, which is based on the proportionate consolidation of its three listed subsidiaries — GenM, Genting Singapore Limited and Genting Plantations Berhad — and associate Genting Empire Resorts LLC (GERL) to decline to 3.5x in 2023 and further thereafter, from 4.1x in 2022.

Fitch Ratings has assigned 'BBB-' ratings to Resorts World Las Vegas LLC's (RWLV, BBB-/Stable) senior secured term-loan and revolver facilities issued by RWLV.

“The term-loan and revolver facilities are secured by substantially all of RWLV's existing assets.

“The proceeds from the secured facilities will be mainly used to refinance a majority of the US$1.25 billion (RM5.8 billion) senior secured debt outstanding as of 1Q2023,” it said.

Fitch said Genting has a 'High' strategic incentive to support RWLV due to the financial contribution and competitive advantage to the gaming group.

“We expect RWLV, which is one of Genting's three flagship assets, to contribute over 20% of Genting's proportionately consolidated Ebitdar from 2024.

“The 'Medium' operational incentive is driven by the sharing of the Resorts World brand and integrated management decision-making, despite limited operational synergies as Genting's casinos operate independently.

“The legal incentive is 'Low' as there are no guarantees and cross-default clauses,” it said.