Daily Brief Credit: Genting Berhad – Tear Sheet – Lucror Analytics and more

We view Genting Berhad as “Low Risk” on the LARA scale. The company has a diversified business profile, having successfully expanded its gaming operations to six countries. In addition, it has minor businesses in plantations, oil & gas and power generation. Genting Berhad has a solid business position in Malaysia (where it is the sole casino licence holder) and Singapore (where it operates in a duopoly with Marina Bay Sands). Despite Genting Berhad’s expansion over the years, the company has maintained a prudent financial profile with moderately healthy leverage.

Genting Berhad’s USD notes are issued by its various subsidiaries. It is not an issuer and does not provide parental guarantees for any of the bonds. This means investors must assess the standalone credit profile of each individual issuer.

Our fundamental Credit Bias on Genting Berhad is “Stable”. We expect the company’s leverage to continue improving, supported by earnings recovery from the COVID-19 pandemic-induced downturn. Genting Berhad is reportedly among the frontrunners vying for a casino licence in New York (housed under Genting Malaysia), albeit the outcome is still uncertain at this point.

Controversies are “Immaterial” in our view. In 2019, a small group of Greenpeace activists briefly protested against Genting Plantations over forest fires in Indonesia, albeit the company denied the allegations. Some ESG-compliant funds may be prohibited from investing in Genting Berhad and its subsidiaries, due to the nature of its core businesses (casinos and oil palm plantations). That said, the group’s main gaming operations are in established and well-regulated markets (Malaysia, Singapore, the UK and Las Vegas). Overall, the ESG Impact on Credit is “Neutral”.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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