Tuesday , March 2 2021

Higher taxes to weigh Genting's Ebitt: Moody's

PETALING JAYA: Genting Bhd's earnings before interest, tax, depreciation and amortization (ebitda) will decrease by approximately € 6 million in 2019 in the context of a highlight scenario where 10% casino fees for game revenue start on January 1, 2019 , said Moody's Investors Service.

The rating agency said raising gambling taxes, taxes, and taxes announced in the 2019 budget is a negative credit for the group as changes, especially casino tax increases of up to 35%, will cause a decline in earnings from of leisure and hospitality in Malaysia and therefore weakens its levers.

Genting is currently paying casino fees up to 25% of gaming revenue.

Moody's also said that the group would be subject to a higher license fee for casinos (from 120-100 million RM per year) and a higher dealer license (from RM10,000 to RM50 , 000 per year).

The rating firm noted that the expected decline in Genting will erode potential initial gains as a result of completing the Genting Integrated Genting Tourism Plan (GITP) at Resorts World Genting.

GITP, which started in 2013, is a development that will enhance Resorts World Genting with additional offers of food and beverages and entertainment and retail areas; a new indoor theme park; and rebuilding the theme park in the open air as a theme park of the 20th Century of Fox World.

Although Genting estimates of loans are projected to weaken, Moody's said it is still within the Baa1 parameters.

"The weight, measured by debt / ebit, will probably increase 3.8 times in 2019, 3.5 times in 2018, while the retained cash flow will probably decline to 12% from 13% in the same period."

Moody's added that there is limited space to allow a debt increase until the completion of the Resorts World Las Vegas (RWLV) construction, and the new integrated station will begin to contribute to the group's earnings.

The RWLV was resolved in May 2015 and its first development phase is underway with the 2020 target. The project will include four towers worth 6,583 hotel rooms.

The resort will be the first in Genting in Nevada. It also operates resorts in Malaysia, Singapore, South Korea, the UK and the Bahamas, according to its website.

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