Expect APAC gaming companies' leverage to stay elevated on virus-induced earnings plunge: Moody's

Wednesday, June 24, 2020 - 16:18
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ALL nine gaming companies with APAC operations have negative outlooks, reflecting uncertainties around reopenings and pace of recovery but most operators can withstand temporary cash burn said Moody's Investors Service in a note on Wednesday. 

"Falling international travel, property closures and the ongoing social distancing measures will keep the gaming sectors' prospects weak until at least 2021. We expect that the combined EBITDA of gaming companies with exposure to APAC will fall around 70 per cent in 2020 before gradually recovering in 2021," said Jacintha Poh, a Moody's vice president and senior credit officer. 

That being said, most rated companies have sufficient liquidity to meet their cash needs and debt payments over the next 12 months - Genting Singapore Limited (A3 negative) has the largest liquidity buffer, which is likely sufficient for more than three years. On the other end of the scale, the liquidity of Studio City Finance (B1 negative) will run out in less than a year. 

Moody's said it expects that operators in Malaysia (A3 stable) and Australia (Aaa stable) could recover sooner because of their significant domestic customer base. 

Meanwhile, they expect the pace of recovery for companies operating in gaming markets that are more reliable on tourism such as Cambodia (B2 stable) and Singapore (Aaa stable) to be slower. Macao SAR's (Aa3 stable) recovery will rest on China's (A1 stable) resumption of the individual visa scheme for Chinese citizens visiting the city. 

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