RAM Ratings affirms Genting Group's ratings

RAM Ratings has affirmed the AA1/Stable/P1 ratings of Genting Berhad (Genting or the Group) and Genting Malaysia Berhad (GenM) as well as the issue ratings of their debt programmes (Table 1). GenM's ratings are aligned with the Group's in view of their close relationship and anticipated parental support from the latter when required.

The ratings continue to be supported by Genting's solid market position, with geographically diversified gaming businesses that include a monopolistic position in Malaysia, duopoly in Singapore and a leading video gaming machine operator in northeastern US. The plantation, power generation, property and oil and gas (O&G) businesses also afford the Group some degree of diversification. Genting's strong liquidity profile is another key rating strength. As at end-June 2024, the Group held RM25.65 bil of cash and cash equivalents against short-term debts of RM3.32 bil. Over the next three years, we anticipate Gentings operating performance to stay on the current uptrend and supportive of the ratings despite rising net debt levels.

The Group's financial performance exceeded our key expectations in FY Dec 2023. Its top line rose 21.1% to RM27.12 bil (FY Dec 2022: RM22.38 bil) on account of higher revenue across all its leisure and hospitality (L&H) segments, particularly operations in Singapore and Malaysia which benefited from the recovery in tourism. The Group's non-L&H segments of plantation and O&G saw a drop in revenue from weaker product prices, but were partially offset by the power division's higher generation income. Genting's operating profit before depreciation, interest and tax advanced 16.6% to RM8.29 bil (FY Dec 2022: RM7.11 bil) owing to the strong L&H showing.

Increased cashflow generation and a slower capital expenditure (capex) outlay resulted in lower net debt of RM17.93 bil as at end-December 2023, leading to a more robust balance sheet (net gearing and funds from op