Genting Malaysia Berhad.

Overview Key strengths Key risks Core subsidiary of Genting Bhd. (GENT), with branding and strategy closely aligned with those of the group. Prolonged revenue volatility in gaming industry as consumer pockets shrink and travel fears continue amid COVID-19. Sole land-based casino operator in Malaysia and dominant player in New York with a strong brand identity. High competition in the U.S. and the U.K. gaming markets might weaken its market position. Leverage to improve amid earnings recovery and moderate capital expenditure (capex). Possible need for financial support for U.S.-based associate company, Empire Resorts Inc., which is highly leveraged and has weak liquidity. Following the reopening of the company's flagship asset on Sept. 30, 2021, and lifting of capacity restrictions in Malaysia,

...Genting Malaysia Bhd.'s (GENM) stand-alone credit quality could improve over the next 24 months as earnings recover amid moderate capex. Following the reopening of the company's flagship asset on Sept. 30, 2021, and lifting of capacity restrictions in Malaysia, Resorts World Genting's (RWG) earnings should recover toward pre-pandemic levels by 2023. Coupled with the completion of major investment plans such as a theme park at Genting SkyWorlds, GENM's annual capex is likely to be benign. This is likely to result in positive free cash flow and stabilize the company's credit quality over the next two years. In our view, its ratio of funds from operations (FFO) to debt will improve to about 17% and debt-to-EBITDA ratio remain below 4x during the same period....

Full Report