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KUALA LUMPUR: Fitch Ratings confirms Genting Bhd conglomerate 
note of & # 39; A – & # 39; because of its monopoly position in gaming in Malaysia and its strong market share in Singapore while its outlook is stable.
The rating agency said Thursday that the A- was intended for the default long-term rating of foreign currency issuers (IDRs) from Genting to "A-".
Fitch also confirmed the long-term foreign currency IDR of Genting Overseas Holdings Limited (GOHL) of Genting at the address "A-", which corresponds to Genting's rating.
"The ratings attributed to Genting reflect its monopoly position in gaming in Malaysia and its robust market share of around 36% in the duopolistic market in Singapore.
"Its leisure and hospitality (L & H) activities in these countries together account for approximately 80% of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA)," the report said.
Fitch pointed out that the gaming industry in these countries is subject to tight regulatory oversight and that the resulting barriers to entry provide some stability to Genting's cash flow during economic cycles.
Genting also leverages the benefits of L & H's asset diversification in the United Kingdom, the United States and the Bahamas, as well as activities such as oil palm plantations, energy, real estate, oil and gas.
Genting has a relatively conservative capital structure with net cash at 1H18.
Resorts World Las Vegas LLC, a unit of Genting's indirect subsidiary, is developing a multi-billion dollar integrated complex on the Las Vegas Strip (RWLV), expected to open by the end of 2020.
"We estimate that the project will increase Genting's investments in 2019-2020, which will increase Genting's indebtedness, as measured by the ratio of consolidated net adjusted debt to operating EBITDAR, net of attributable net income to minorities," beyond 1.0 times, the level at which Fitch will consider a negative assessment of, by 2020.
"We maintained a stable outlook, as we expected debt to decline after 2020 thanks to the contribution of RWLV's revenues and a moderation of investments.
"However, any significant adverse change in Fitch's expectation regarding Genting's debt profile could result in a negative rating action," he warned.
The main factors of evaluation of Fitch
RWLV capex to generate leverage: Ficth estimates that RWLV spending would represent more than 60% of Genting's total investment, which is around 19 RMB in 2019-2020.
Genting's annual capex in 2019-2020 will be much higher than our estimate of approximately RMBbil in 2018 and RMBbil annually in 2014-2017.
"As a result, we estimate that Genting 's debt will increase above 1.0 times by 2020. We expect debt to decrease thereafter after the year. opening of RWLV. The group's history of prudent capital management meets our expectations, "he said.
Healthy performances in Malaysia to offset taxes: The Malaysian government will increase casino fees by 10 percentage points compared to 2019, which, according to Fitch, will reduce Genting's EBITDA by about 700 million RMB annually.
"Genting is reviewing its marketing strategy and cost structure to mitigate the impact, and we anticipate streamlining of rebates and commissions as well as potential reductions in payroll to achieve annual cost benefits from minus RM 150 million over the next three years.
"We also expect revenue growth, particularly in the gaming sector, from Malaysia's Resorts World Genting Complex (RWG) in Malaysia to mitigate the impact of higher taxes.
"The number of visitors to RWG has increased by 21% in one year in the first half and the station aims to open more attractions, such as a new indoor amusement park." , to stimulate growth in 2019 and in the medium term, "says Fitch.
Stable operations in Singapore: Genting Singapore, which accounted for approximately 50% of Genting's consolidated EBITDA and approximately 40% of the consolidated cash position in 2017, continued its strong operating performance on 9M18 with EBITDA up 6% (2017: 48%). , supported by the volume of rolling chips VIP growth.
Fitch expects Genting Singapore to maintain stable EBITDA thanks to continued cost discipline, prudent credit policy and steady growth in visitor numbers in Singapore (9M18: 7.5%; 2017: 6.2%).
Fitch does not expect an intensification of competitive pressures on the Singaporean market, as it is unlikely that the government will grant another casino license in the medium term.
Egyptian government ratings equal to those of parents: GOHL's ratings are equal to Genting's ratings due to Fitch's assessment of its strong operational and strategic relationships, in line with the rating matching criteria of parent companies and Fitch's subsidiaries.
GOHL, wholly owned by Genting, is the holding company of Genting's 52.8% stake in Genting Singapore, which owns 100% of Resorts World Sentosa, an integrated leisure resort with a casino, hotels, parks leisure and shopping, in Singapore.
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