Moody's warned that the impact may lead to concerns about rising debts affecting Genting's credit rating.

Moody's Ratings reaffirmed Genting's Baa2 rating with a 'stable' outlook, but cautioned that aggressive New York business expansion leading to increased debts could impact the credit rating. $GENTING (3182.MY)$ International rating agency Moody's Ratings reiterated Genting Sing's Baa2 rating and 'stable' outlook, but warned that the aggressive expansion of the New York business leading to higher debts could potentially affect the credit rating.

The rating agency warned that Genting Sing's expansion opportunities in New York significantly increase debt, negatively impacting credit ratings. At the same time, it pointed out that Genting Sing's capital expenditures are high, with business expansion in Singapore and investments in the energy sector currently underway.

We expect that capital expenditures in 2024 and 2025 will increase from 2.8 billion ringgit in 2023 to 6 billion to 7 billion ringgit per year.

However, Moody's provided a 'stable' outlook, reflecting stable revenue and cash flow growth for all Genting Sing's business in the next 12 to 18 months. The agency also stated that Genting Sing's credit rating could be upgraded if future expansion projects do not require additional debt support.

The forecast for capital expenditures does not take into account the related investments if the New York gaming license is approved, as the granting of the license still carries uncertainty.

Genting Sing is currently bidding for the New York gaming license, with regulatory authorities expected to grant the license by December 2025. The group plans to invest $1.1 billion (approximately 4.78 billion ringgit) by 2026 after obtaining the license, and an additional $2.9 billion (approximately 12.6 billion ringgit) between 2026 and 2030.

Moody's pointed out that dividends from subsidiaries and a sound debt management structure have strengthened Genting Sing's independent liquidity performance.

Litigation impact is limited.

On the other hand, Genting Sing is currently facing complaints from the Nevada Gaming Control Board (NGCB) and lawsuits from a Panamanian partner. However, Moody's believes that these litigations have a limited impact on operational and financial performance.

Moody's pointed out that Genting's business in Singapore and Malaysia contributed 72% of the EBITDA before depreciation and amortization in the first half of 2024, while the group achieved diversified revenue through not only gambling business but also plantation and energy businesses.

"We expect the company's EBITDA to increase by 4% to 5% from 10 billion ringgit in 2023 to 2024 and 2025, mainly driven by the Malaysia-Singapore gambling business, with Las Vegas contributing relatively less."

Bullish on Lion City's profits.

Moody's expects that due to the impact of economic uncertainty and a slowdown in demand, as well as temporary weakness in operational performance due to hotel renovations, Genting Singapore's EBITDA in 2024 will reach 1.2 billion Singapore dollars (approximately 3.93 billion ringgit), slightly higher than last year.

However, as new attractions open in phases in 2025 and operational capacity is restored, Genting Singapore's EBITDA is expected to reach 1.3 billion Singapore dollars in 2025 (4.289 billion ringgit).

"Genting Singapore will invest 6.8 billion Singapore dollars (approximately 22.4 billion ringgit) in phased expansion or renovation of facilities at Sentosa Resorts World. Although the total amount is substantial, it is expected that capital expenditure will peak at 1 billion Singapore dollars (approximately 3.3 billion ringgit) annually in 2027 to 2028."