DigiPlus shares down amid legal dispute, regulatory pressures

DIGIPLUS Interactive Corp.’s shares declined last week following news of an ongoing legal dispute with former Ako Bicol Party-list Rep. Elizaldy S. Co and continuing regulatory pressures on the online gaming industry.

Philippine Stock Exchange (PSE) data showed DigiPlus was among the most actively traded stocks from Dec. 1 to Dec. 5, with 15.30 million shares worth P348.73 million changing hands.

Shares in the Tanco-led company closed at P22.10 apiece on Friday, down 9.8% from P24.50 the previous week. The stock underperformed the services sector’s 4.3% gain and the 1.2% contraction in the benchmark PSE index (PSEi).

Year to date, the stock has fallen 18.6%, compared with the services sector’s 19% growth and the PSEi’s 8.9% decline.

News of the ongoing legal battle between DigiPlus and Eco Leisure and Hospitality Holdings, a firm owned by Mr. Co, over the valuation of Midas Hotel and Casino “likely caused a bit of caution among investors and weighed slightly on the stock’s movement,” Juan Alfonso G. Teodoro, equity trader at Timson Securities, Inc., said in a Viber message.

However, Mr. Teodoro said the impact is limited because the hotel-casino business accounts for only a minor portion of DigiPlus’ total valuation.

“While the issue may have created short-term uncertainty, it isn’t expected to change the company’s overall long-term outlook,” he added.

Law firm Villaraza and Angcangco, which represents DigiPlus, confirmed that an arbitration case between the online gaming company and Eco Leisure and Hospitality Holdings had been decided in DigiPlus’ favor. The latter has appealed the ruling in the Regional Trial Court in Pasig, where the case remains pending.

Mr. Teodoro also cited weaker recent earnings and continuing regulatory pressures on online gaming as additional drivers of the stock’s decline this week.

“Investors turned cautious as the company adjusts to rules that disrupted their user activity,” he said.

In August, the Bangko Sentral ng Pilipinas ordered e-wallet and digital payment firms to delink in-app gambling access from their platforms, curbing ease of access to online gaming payments.

In the coming weeks, Mr. Teodoro said investors should watch “whether user engagement recovers with the new payment options, any new regulatory updates, and how the company’s diversification plans can help balance out the online slowdown.”

In the third quarter, DigiPlus’ revenue increased 0.3% to P19.05 billion from P19 billion in the same period last year. Its total nine-month revenue reached P66.83 billion, up 29.6% from P51.56 billion in the previous year. Net income for the July-September period was halved to P1.71 billion from P3.52 billion, bringing its nine-month net income to P10.11 billion.

Mr. Teodoro expects fourth-quarter earnings of about P2.94 billion and full-year earnings of P12.89 billion. He placed support at P19-P20 per share and resistance at P30-P28 per share. — Isa Jane D. Acabal