Genting Berhad’s Malaysia and Singapore integrated resort assets are expected to recover to between 85% and 90% of pre-pandemic revenue levels this year, and complete a full recovery next year as visitor numbers continue to climb, according to Fitch Ratings.
The estimate formed part of a ratings commentary issued by the agency on Friday in which it assigned “BBB-” ratings to Resorts World Las Vegas LLC’s (RWLV) recently acquired senior secured term-loan and revolver facilities, which are being used to refinance a majority of the company’s US$1.25 billion senior secured debt outstanding as of 1Q23.
In doing so, Fitch took a deep dive into RWLV’s parent, Genting Berhad, which it described as having high strategic and medium operational incentives for providing support to its Las Vegas integrated resort.
Noting “robust recovery” in Malaysia, home to Resorts World Genting, and Singapore, home to Resorts World Sentosa, Fitch said, “Genting’s key assets in Malaysia and Singapore, which together contributed over 60% of group EBITDA in 2022, saw visitor numbers rebound from April 2022 after pandemic-led restrictions were lifted.
“We expect revenue to reach 85% to 90% of 2019 levels in 2023 and pre-pandemic levels in 2H24.
“Genting’s workforce reduction in Malaysia should offset wage inflation and allow 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 2Q22.”
Fitch also predicts Genting’s EBITDAR net leverage will decline to 3.5x in 2023 and further thereafter, down from 4.1x in 2022.
On the ramp of the US$4.3 billion RWLV, which opened in 2021, Fitch estimates EBITDAR improving to US$350 million by 2025, up from around US$115 million in 2022.
Describing it as one of Genting’s three flagship assets, the agency expects RWLV to contribute over 20% of the company’s proportionately consolidated EBITDAR from 2024, aided by several recent cost-cutting initiatives, including workforce reduction, “which should support margins from 2023”.
Fitch added, “[RWLV] benefits from being the first new property in the area in over a decade, an experienced management team and healthy market trends. However, it also faces significant competition in a mature market and will have to gradually carve its brand identity to compete effectively.”
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