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 web gaming industry.
Philippine Stock Exchange (PSE) data showed DigiPlus was amongst probably the most actively traded stocks from Dec. 1 to Dec. 5, with 15.30 million shares price P348.73 million changing hands.
Shares within 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 within the benchmark PSE index (PSEi).
12 months to this point, the stock has fallen 18.6%, compared with the services sector’s 19% growth and the PSEi’s 8.9% decline.
News of the continued 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 little bit of caution amongst investors and weighed barely on the stock’s movement,” Juan Alfonso G. Teodoro, equity trader at Timson Securities, Inc., said in a Viber message.
Nonetheless, Mr. Teodoro said the impact is restricted since the hotel-casino business accounts for less than a minor portion of DigiPlus’ total valuation.
“While the difficulty could have created short-term uncertainty, it isn’t expected to vary the corporate’s overall long-term outlook,” he added.
Law firm Villaraza and Angcangco, which represents DigiPlus, confirmed that an arbitration case between the web gaming company and Eco Leisure and Hospitality Holdings had been decided in DigiPlus’ favor. The latter has appealed the ruling within the Regional Trial Court in Pasig, where the case stays 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 corporate 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 approaching weeks, Mr. Teodoro said investors should watch “whether user engagement recovers with the brand new payment options, any recent regulatory updates, and the way the corporate’s diversification plans might help balance out the web slowdown.”
Within the third quarter, DigiPlus’ revenue increased 0.3% to P19.05 billion from P19 billion in the identical period last 12 months. Its total nine-month revenue reached P66.83 billion, up 29.6% from P51.56 billion within the previous 12 months. 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