Fitch: Gaming industry stable despite lower visitors, win rates

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KUALA LUMPUR (Sept 7): Fitch Ratings’s outlook on the gaming industry in Singapore and Malaysia continues to be stable, despite declining visitor arrivals in Singapore and lower win rates.

In a statement Sept 6, Fitch said the lower win rates recorded in Singapore-based Genting Singapore PLC (GENS) and Malaysia-based Genting Malaysia Berhad (GENM) is mostly evident in the VIP player segment.

However, the ratings agency noted all three integrated resorts (IRs) continue to generate robust earnings before interest, taxes, depreciation and amortisation (EBITDA) margins in excess of 30%.

“GENS and GENM are in a net cash position, while Marina Bay Sands Pte. Ltd. (MBS) has been deleveraging,” the statement read.

“Days receivable continue to be high at over 100 days, as GENS and MBS extend credit directly to their VIP patrons,” it added.

Although Genting Bhd (Genting, A-/Stable), the holding company of GENS and GENM, has substantial expansion plans in 2015 and 2016, the ratings agency said it does not expect the plans to have an adverse effect on Genting's credit profile, as the company proposes to fund this through a combination of debt and cash.

“Genting executing its expansion plans, while simultaneously maintaining its low leverage and managing its receivables efficiently is key to maintaining its credit profile,” it added.

UOB Kay Hian Research had also reportedly said in August that Malaysian-listed casino operators continued to appeal to investors, due to their cheap valuations, relative earnings resilience and promising growth opportunities.

Genting (fundamental: 1.95; valuation: 4)'s shares are currently trading at one sen or 0.14% lower at RM6.90, with 468,400 shares done.