KUALA LUMPUR: S&P Global Ratings expects Genting Bhd’s ongoing operational recovery to meet its expectations, underpinned by disciplined spending and the reopening of Malaysian borders from April 1.

       The rating agency, which has a BBB-/Stable/-- rating on Genting, said the stable outlook reflects its expectation that the group’s credit quality will stabilise.

       “This follows the completion of its major investment cycle as well as our expectation of an operational recovery over the next two years, as Covid-19 restrictions gradually ease in its key markets.”

       S&P Global Ratings noted that the Malaysia-based holding company of the Genting group reported an earnings before interest, taxes, depreciation, and amortisation (Ebitda) of RM4bil for 2021.

       “This was up nearly 40% year over year, though still 45% to 50% below pre-pandemic levels. For 2022, we expect Ebitda to reach about 80% of pre-pandemic levels.”

       The rating agency said Genting’s capital spending could substantially decline to RM3bil in 2022 from RM8.7bil in 2021.

       “This follows the completion of major investment plans in the United States and Malaysia.

       “The company’s remaining investment plans in Singapore spanning the next four to five years should be manageable.” it said.

       Additionally, it said a withdrawal of bidding for the Yokohama casino project in Japan will ease Genting’s capital-spending needs over the next two to three years.

       “As a result, we expect positive, though marginally incremental discretionary cashflow from 2022, a reversal from the past several years.”

       S&P Global Ratings said it is expecting an Ebitda recovery in 2022.

       “This is despite a slower recovery due to the pandemic and various remaining social restrictions, such as capacity limits for gaming tables and proof of vaccination to enter casino premises.

       “The recovery would be supported by a reopening of international borders and pent-up demand. For example, Malaysia will reopen its borders to international visitors from April 1, 2022, after shutting them for nearly two years.”

       Separately, the rating agency said Genting’s US assets have quickly recovered.

       “Resorts World Las Vegas (BB+/Stable/--) should meaningfully contribute to earnings from 2022. In addition, a better recovery than we expect at Genting New York LLC (BB+/Stable/--) and Empire Resorts Inc (B+/Stable/--) should help.

       “Although social-distancing measures could hinder a full recovery of operations over the next 12 months, we expect Genting’s current earnings momentum and lower capital spending to support its credit quality.”