Genting Malaysia posts 1Q22 EBITDA profit but results weaker-than-expected

-Genting Malaysia said it had swung back to profit at the EBITDA level in 1Q22 as revenue surged by three times following the lifting of Covid restrictions, but the results missed expectations.The company posted EBITDA of RM414.4 million ($94.2 million), compared with a loss on that level of RM110.4 million a year earlier. The group’s net loss narrowed by 70 percent to RM147.9 million, while revenue surged to RM1.72 billion. The results missed expectations from J.P. Morgan for EBITDA of RM450 million and were weaker than the prior quarter. In an announcement to Bursa Malaysia, Genting reported an improvement in all of its worldwide business segments as Covid restrictions eased from the prior year. It said it was positive on the long-term outlook for the leisure and hospitality segment, even though in the short term supply issues, pressure on global economic growth and lingering Covid concerns may weigh.Genting is the operator of the only casino in Malaysia, Resorts World Malaysia, which forms the largest part of its business. It also has operations in the U.K., Egypt, New York state and the Bahamas. In Malaysia, where the group has just completed a revamp of the property, revenue more than tripled to RM920 million.In the U.K. and Egypt revenue was more than 10 times higher that 1Q21 at RM395.3 million, while the operations returned to an adjusted EBITDA profit of RM84.7 million, from a loss of RM51.7 million a year earlier. The business in the U.S. and Bahamas recorded a 40 percent increase in revenue to RM357.9 million, helped mostly by Resorts World New York City which operated without Covid restrictions throughout the period. Genting said the New York property reached gross gaming revenue that was close to pre-pandemic levels. The group’s associate company in the US, Empire Resorts, recorded similar improvements in its operating performance in 1Q22, with gross gaming revenue at Resorts World Catskills surpassing pre-pandemic levels. Genting is scheduled to open a new video gaming facility in Orange County, known as Resorts World Hudson Valley, later this year. The group said the development is progressing well and the “emphasis continues to be placed on its timely completion.”


Genting Malaysia stock hits nine-month high

-Shares in Genting Malaysia rose nearly 5 percent on Monday, hitting their highest level in nine months, on expectations the government’s easing of restrictions on interstate travel will benefit the casino operator.Quick take: Genting hits 9-month high (The Star)


M88 Mansion appointed as official betting partner of Badminton World Federation

-M88 Mansion has been appointed as the official betting partner of the Badminton World Federation (BWF).The three-year deal will grant M88 Mansion an enhanced brand awareness across the Asian sports betting market via utilisation of exclusive digital assets and marketing collaterals across digital platforms, as well as access to player content.Carlos Lopez, Creative Director of M88 Mansion, stated: “We are very much delighted and thrilled to partner with BWF over the next three years. Badminton is recognised as a worldwide sport and has a fast-growing audience not only in Asia but globally. Joining forces with BWF will help elevate the connection between M88 Mansion and its Asian followers to expand its brand visibility in the region. We believe that this partnership will create compelling and sustainable value for both parties.”According to Owen Leed, BWF Commercial and Communications Director, the strategic partnership between BWF and M88 Mansion will strengthen the profile of badminton worldwide.“We are excited to announce our partnership with online betting platform M88 Mansion as we look to strengthen the sport’s profile globally,” Leed said.The deal was brokered by BWF’s Commercial and Broadcast partner, Infront, with the assistance of Outlast Sports and Entertainment. “This is just the start of the evolution of the engagement of the sports fans by M88 Mansion. Expect more exciting things in the coming months together with BWF,” said Outlast CEO Salauddin SS.The partnership encompasses the following tournaments:


Genting boss out of Malaysia’s top 10 richest

-Genting Berhad Chairman Lim Kok Thay slipped out of the top ten list of Malaysia’s wealthiest tycoons as the pandemic took its toll on the casino business, while Nagacorp head Chen Lip Keong also took a dip in the rankings, compiled by Forbes.Lim went from 7th position with a fortune of $3.2 billion to 11th with $2.55 billion, while Chen slipped from fourth with $5.3 billion to 7th with $3.2 billion.Wealth of Malaysian on Forbes top 50 list rebounds after two year decline (Forbes)


Malaysia opposition seeks explanation of how Genting H.K. got unsecured loans

-Malaysia’s opposition leader has called on the finance minister to explain how three of the country’s banks were able to provide RM2.5 billion ($600 million) in unsecured loans to Genting Hong Kong, which has filed for bankruptcy protection. Maybank, CIMB and RHB Bank were some of the cruise ship operators’ main unsecured lenders, local media reports. In a post on his official Facebook page, Anwar Ibrahim said the banks risk losing billions of ringgit due to the collapse of Genting.“I urge the finance minister to immediately answer why these banks were allowed to give Genting Hong Kong unsecured loans?” he said. “The government, through Permodalan Nasional Berhad (PNB), Khazanah, and the Employees’ Provident Fund (EPF), are the largest shareholders of these three banks.“How could this gambling company get an unsecured loan so easily?”Anwar continued that although the company is registered in Hong Kong, it is owned by a Malaysian and therefore he should have been asked for his personal guarantee, or a guarantee against his Malaysian assets.Billionaire businessman Lim Kok Thay stepped down as chairman and chief executive on Jan 24th after Genting Hong Kong filed for bankruptcy in Bermuda. Lim is chairman of Malaysia’s sprawling Genting Group and the second son of Lim Goh Tong, who founded the conglomerate.Genting H.K. was plunged into financial difficulties after Covid forced the shutdown of the global cruise industry. It agreed a financial restructuring package with creditors last May. However, that unravelled after the German state of Mecklenburg Vorpommern failed to provide an agreed $88 million backstop facility unless the company agreed to further conditions on the financing.The action triggered the insolvency of one of the group’s German shipyards, which in turn led to a series of cross defaults putting some $2.7 billion in debt at risk.


Resorts World Genting extends closure to February 18

-Genting Malaysia’s Resorts World Genting said it’s extending the closure of its property until February 18 due to the extension of movement control orders in the country.Resorts World Genting statement


Genting U.S. revenue picks up in Feb., Asia opening to be new catalyst

-Genting Group’s U.S. revenue picked up in February as Covid concerns eased, while the group is likely to start seeing growth in its Asian operations as borders reopen, Nomura says.The group’s Resorts World New York City had three-month gross gambling revenue of $204 million through to end-February, which was down 9 percent for the same period pre-Covid. However, in February, GGR rose 8 percent from the prior month at the facility, which offers 6,447 video gaming machines. It was a similar story at Resorts World Catskills, where GGR was down 14 percent sequentially on a three-month basis at $52 million but was up 8 percent month-on-month in February. The three-month figure was down 1  percent on the pre-Covid level.Nomura notes that it doesn’t have monthly data for Resorts World Las Vegas, which opened last summer, but Las Vegas Strip revenue saw a 13 percent decline sequentially, though was up 72 percent year-on-year and was 3 percent higher than the same months in 2019/2020.“The surge in Omicron variant-linked Covid cases and the winter months impacted GGR in Jan’22. However, GGR improved m-m in Feb’22 as the case count reduced. Cases continue to fall in Mar’22, and therefore we expect momentum to improve further,” Nomura said in a note.The firm has a buy rating on Genting Malaysia with a price target of MYR3.50, which implies an 18 percent upside. It is neutral on parent company Genting Bhd. “We think the next catalyst for the group will be the start of inbound international tourism in its home markets (Malaysia/Singapore). Malaysia has reopened its borders from April 1, and Singapore too continues to relax visitation restrictions.”The Genting Group operates casinos in the U.S., Singapore, Malaysia, the U.K., the Philippines and Egypt.Its U.S. operations were the focal point last year, with the North American gaming market staging a strong comeback while Asia remained mostly closed. Singapore and Malaysia also recently reopened their land border, which has historically been a key source of visitation for the island state.Analysts at Bernstein said Genting Singapore is expected to show revenue and profit growth over the rest of 2022 and 2023 as Singapore and neighboring countries continue to open up to international travel.The Philippines are also now operating at full capacity and industry observers say they are seeing a strong recovery. International borders have reopened, although locals are permitted to gamble, making it one of the Asian markets with the strongest fundamentals. In the U.S., Genting is eyeing further expansion and is seen as one of the top contenders should New York push ahead and issue casino licenses for the downstate area.


Fitch compares casino risk as Genting gets cut again [TGIF]

-The ongoing pandemic is keeping the ratings agencies on their toes as they seek to assess the impact of the slower-than-expected recovery on the balance sheets of operators which made significant capital commitments back when the future had looked bright.This week it was the Genting Group’s turn once again to feel the sharp end of Fitch Ratings’ pen, with its outlook downgraded to “negative” from “stable.” It’s the second time in a month that Fitch has tweaked its verdict on Genting, having actually cut its long-term issuer default rating to BBB from BBB+ on October 16.Fitch says the latest revision reflects the risks around Genting’s ability to cut leverage back to 3x by the end of 2023. “The Negative Outlook captures the risk of a much slower gaming recovery than our current forecast such that Genting’s leverage is elevated for an extended period,” it said. “This may result from recurring waves of infection, leading to intermittent border closures and continued strict social distancing.”Genting has properties across the globe and is scheduled to open another in Las Vegas in summer next year. While its Genting Malaysia resort has seen strong local visitation to support revenue, its property in Singapore is heavily reliant on foreign visitation and borders remain largely closed to the island.Its casinos in the U.K. had reopened, but have been forced to shut again as a second coronavirus wave sweeps across Europe and Resorts World Bimini in the Bahamas also remains shut. Fitch forecasts Genting Singapore’s EBITDA won’t return to pre-pandemic levels until 2023, compared with a previous forecast of 2022. The full ramp up of RWLV is now expected to be delayed until 2024, versus a previous forecast of 2023.All of which points to little wiggle room to cut debt. As well as completion of RWLV, the company has committed to an SG$4.5 billion expansion in Singapore, is completing investments under a 10-year plan in Malaysia and is adding a new hotel at its Resorts World New York Casino next year. To be sure, Genting’s not the only company under Fitch’s ratings spotlight. It’s interesting reading to look at the comparative ratings and the explanations for the assessment.For example, Genting and Australia’s Crown Resorts have the same risk profile and are rated at the same level. Genting has larger operations and greater geographical diversity, but Crown has a stronger financial profile and is seen as being able to deleverage back to 1x by June 2022, helped by a strong domestic market.However, Crown’s negative outlook stems from its weak corporate governance structure, which was on full display again this week as the suitability inquiry in New South Wales heard closing arguments.There, counsel arguing the case have put forward that the company is “unsuitable” to hold its Sydney license prompting New South Wales Premier Gladys Berejiklian to seek advice on whether she can force the company to delay the opening of its $2.2 billion Barangaroo casino.She has said that she may allow facilities, such as the hotel and restaurants to open, but potentially not the gaming operations pending the ultimate decisions by regulators on the license issue.When it comes to U.S. casino giant Las Vegas Sands, Genting has a higher rating. That’s due to a more diversified gaming operation and its past record of maintaining a more conservative balance sheet.LVS is highly reliant on Macau, where there are risks around concession renewal in 2022. That dependence looks set to rise still further as the company is seeking to sell off its Las Vegas assets. Still, if it manages to raise the $6 billion price tag for the Venetian and Palazzo, it will have plenty of scope for debt reduction, or indeed further expansion.While some analysts had warned that the company may find it hard to find buyers given the impact of the pandemic on corporate balance sheets, two companies came forward this week to say that’s not the case.MGM Growth properties said it still sees significant potential in Las Vegas and that it does think that amount of capital could be deployed. Executives on a call didn’t say whether or not they have initiated talks. Vici Properties was another that put up its hand.