The Philippine stock market continues to languish, with the PSD index still hovering around 30% below its 2018 peak, underperforming surrounding markets. In this quiet market, Digi Plus Interactive has become the absolute protagonist in trading volume, contributing one-third to half of the market's transaction volume in the past two months, and is considered the only "money-making story".
Its stock price soared from 1 peso to 65 pesos, surpassing the market value of the dining giant Jollibee, and setting a record for the highest quarterly profit in history. However, after the latest financial report was released, the stock price fell by 20%, dropping to 26 pesos, only half of its peak, raising investor concerns about whether its growth momentum has peaked.
William Cabangon, president of AAA Securities, pointed out that although the current valuation has fallen to a low of 10 times the expected price-to-earnings ratio, the market is more concerned about future uncertainties. "The biggest question in investors' minds is: Has Digi Plus's golden age passed?" he said.
Regulatory pressure is the biggest risk. The Central Bank of the Philippines has required electronic wallet platforms to sever direct links with online gambling, and 90% of Digi Plus's bets are flowing through these wallets. Analysts warn that if the funding channels are blocked, it will deal a fatal blow to revenue. The company is seeking to expand into the Brazilian and South African markets to diversify risks, but the uncertainty of the regulatory environment makes the outlook unpredictable.
Despite the latest financial report showing that Digi Plus's net income in the first half of the year increased by 60.9% year-on-year, and monthly active users exceeded 8.5 million, its market share slipped from 45% to 39%, putting pressure on profit quality. Meanwhile, the Philippine Senate is deliberating on several bills, some of which propose a complete ban on domestic online gambling, and the Central Bank and the Ministry of the Interior are also tightening related policies.
Investics Research believes that while a comprehensive industry ban is unlikely, policy tightening is almost certain. Cabangon reminds investors to remain cautious, "In such stocks, the timing of purchase is more important than anything else, and once a mistake is made, the loss will be difficult to recover."
