The independent balance sheet of Malaysia Genting Bhd, parent company of various casino operations in Asia Pacific and beyond, is already “weak” than before, and current capital spending on the new Las Vegas plan “is a drag on the balance sheet” even without the impact of COVID-19 on the group’s operations, according to a report by Nomura Group on Friday.
The genting parent company said in its latest Q1 report that it has spent $2.1 billion so far, including land costs, on the development of Resort World Las Vegas, a new casino complex at its Nevada gaming hub in the U.S. The company said total capital expenditure on the plan was $4.3 billion.
A memo from analysts Tushar Mohata and Alpha Aggarwal reiterated that construction on the site has not been halted, as construction activities have been classified as essential businesses in Las Vegas. Operations at existing Nevada casinos have been suspended since March 18, but the company has preliminary plans to resume operations from June 4, subject to approval by the Nevada Gaming Control Board.
According to management, Resort World Las Vegas will also open in the summer of 2021.
Nomura said it recently cut earnings forecasts for Genting Malaysia Bhd, operator of Malaysia’s only casino resort World Genting, and Genting Singapore Ltd, operator of Singapore resort World Sentosa, due to COVID-19.
Along with “delayed capital spending plans and the opening of outdoor theme parks in Malaysia at the end of 2021,” the agency now expects Genting’s parent company to “record a marginal core net loss of 29 million yuan [US$6.6 million] in fiscal 2020, improving from 1.1 billion yuan to 1.3 billion yuan in profit in 2021-2022, i.e., a ‘tick’ form of earnings recovery,” analysts wrote.
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