Genting’s Bold Expansion: How New York License & $6B CAPEX Drive S&P’s Negative Outlook

Genting’s Capital‑Intensive Growth Strategy and Its Impact on Credit Outlook

Genting Group’s recent disclosures underscore a bold expansion agenda that is reshaping the company’s capital structure and credit profile. The group’s flagship operator, Genting Malaysia Bhd (KL:GENM), has secured a new casino licence in New York, while its parent, Genting Bhd, faces a significant increase in projected capital expenditures and a tightening of credit buffers. These developments are at the heart of Standard & Poor’s decision to downgrade the outlook on Genting and several key subsidiaries to “Negative.”

1. High‑Scale Investment Plan

S&P Global Ratings’ latest assessment notes that Genting’s 2026 capital‑expenditure (CAPEX) forecast will approach RM6 billion, roughly double the RM3.4 billion spent in 2024. The bulk of this spending will support:

The cumulative effect is a projected CAPEX stream exceeding RM8 billion per annum through 2030, a level that will outpace revenue growth and erode free‑cash‑flow (FCF) reserves.

2. Credit Quality Under Pressure

S&P’s report highlights two key metrics that will deteriorate in the medium term:

1. Free‑cash‑flow to debt (FFO‑to‑Debt) – Expected to fall below 20 % in 2026‑27, dipping into the sub‑investment‑grade zone.
2. Total debt – Anticipated to rise from RM21 billion in 2024 to RM35 billion by 2028, reflecting the financing required for the CAPEX program.

The downgrade does not affect the long‑term ratings; it reflects a negative outlook that signals potential further action if the group fails to implement disciplined debt‑management and refinancing strategies.

3. New York Casino Licence: A Strategic Lever

The New York licence, awarded unanimously by the New York State Gaming Commission, positions Genting as a near‑monopoly in a high‑income market. The licence’s financial upside is significant:

• Pre‑tax earnings projected at > USD 400 million per year, translating to approximately RM16 billion in the long run.
• The licence’s contribution is expected to offset part of the CAPEX burden, but only after the facility becomes fully operational (mid‑2026).

The timing of the licence’s cash‑flow recovery is therefore critical; the interim period will see intensified negative FCF.

4. Operational and Market Context

• Visitor Traffic: Genting Highlands visitor arrivals grew 12.9 % in 2024, reaching 28.1 million, indicating resilient demand for the group’s flagship resort.
• Road Charge Initiative: The introduction of a private road charge for the Genting Highlands access route is projected to have minimal impact on visitor flows, as confirmed by industry analysts.
• Semiconductor Revenue: UWC, a Genting‑owned subsidiary, reported a 35.1 % revenue rise in Q1 FY2026, driven by AI‑related semiconductor orders, providing a diversification cushion outside the core gaming business.

5. Forward‑Looking Outlook

The downgrade signals that S&P believes the current growth strategy may outpace the group’s financial discipline. The company’s ability to:

• Maintain FFO‑to‑Debt above 20 %,
• Secure refinancing before 2028,
• Deliver earlier-than‑expected operating gains from the New York licence,

will determine whether the outlook stabilises or deteriorates further. Investors should monitor Genting’s debt‑management plans, the pace of the New York project, and the performance of its non‑gaming subsidiaries as key catalysts in the coming months.

In sum, Genting’s aggressive expansion offers upside potential, but it also creates a tangible risk premium that has prompted Standard & Poor’s negative outlook. The company’s strategic focus will now hinge on balancing growth with robust capital discipline to preserve its credit standing.