Fitch Ratings says it expects Malaysian-based integrated resort operator Genting Malaysia to return to pre-pandemic level EBITDA and deleverage by the end of 2022 thanks to healthy demand from the domestic market.
The assessment formed the basis for Fitch to this week issue Genting Malaysia with a Long-Term Issuer Default Rating (IDR) of BBB with a negative outlook, impacted by the effects of the global COVID-19 pandemic.
A BBB rating considers companies to be of investment grade, medium class and satisfactory at any given point in time.
Despite COVID-19 resulting in a net loss of MYR2.26 billion (US$547 million) for Genting Malaysia in FY20, Fitch noted that pent-up demand from locals had seen the companys Malaysian IR, Resorts World Genting (RWG), recover to 66% of 3Q19 revenue and 79% of EBITDA in the third quarter of 2020. RWG was later forced to suspend operations in January 2021 on a new wave of COVID-19 before opening again a month later.
Performance tapered off after the re-imposition of interstate travel curbs to contain rising infections and a temporary closure at the start of 2021, but the jump in gross gaming revenues when there are no travel bans shows resilient domestic demand, which supports Genting Malaysias recovery, Fitch said.
Genting Malaysias domestic-focused operation also means the company is better positioned for a faster post-pandemic recovery than peers in destination markets, where recovery depends on resumption of cross-border travel.
Fitch expects Genting Malaysias EBITDA to return to pre-pandemic levels and net debt/EBITDA to fall to below 3x by end-2022 on healthy demand.