Moody’s expects DigiPlus’ 2026 EBITDA to fall 20pct, assigns firm initial B1 rating

DigiPlus Interactive Corp, a provider of online gambling services in the Philippines and holder of licences in South Africa and Brazil, is likely to face a 20.3 percent decline in annual earnings before interest, taxation, depreciation, and amortisation (EBITDA) for 2026, to about PHP11.4 billion (US$181.8 million). That is according to an estimate released on Thursday by Moody’s Ratings, as it assigned Philippine-listed DigiPlus a first-time B1 corporate family rating – below investment grade. The outlook is ‘stable’. “DigiPlus’ concentration in the Philippines exposes the company to earnings volatility amid frequent regulatory changes,” said the credit rating agency. “However, tighter regulation is likely to accelerate industry consolidation that favours incumbents, such as DigiPlus, with meaningful scale, financial resources and ability to adapt,” the institution added. Moody’s said the expected decline in DigiPlus’ 2026 EBITDA, from PHP14.2 billion in 2025, reflected the Philippine central bank’s August 2025 directive requiring mobile wallet and payment providers to delink in-app access to online gaming platforms, “which reduced industry-wide online gross gaming revenue”. The ratings agency also cited “weaker consumer sentiment” amid high fuel prices and “broader inflationary pressures” as constraints on discretionary gaming spending. Moody’s expects DigiPlus’ annual EBITDA to recover to “around PHP14 billion to PHP15 billion” in 2027 and 2028, “supported by organic growth and contributions from the consolidation of International Entertainment Corp and overseas investments”. In early June, DigiPlus completed a second subscription to convertible notes in Hong Kong-listed International Entertainment to the value of HKD800 million (US$102.1 million). The total HKD1.60-billion convertible package – if fully converted – would result in DigiPlus holding a 53.89 percent stake in International Entertainment. International Entertainment controls the LaVie Resort & Casino Manila, a property that holds a provisional casino gaming licence from the Philippine Amusement and Gaming Corp. DigiPlus reported that its second-quarter EBITDA fell 36.9 percent year-on-year to PHP2.84 billion. Largest online operator in the Philippines Moody’s stated that DigiPlus was now the “largest online gaming operator in the Philippines”, with an estimated market share of 38.5 percent and around six million monthly active users. The institution said the firm’s portfolio of “more than 1,000 games across bingo, electronic games, and sports betting” supported user engagement, network effects, and efficient customer acquisition and retention. “DigiPlus’ B1 rating reflects its leadership in the Philippines’ online gaming market and strong financial profile, underpinned by low leverage, robust cash generation and a net cash position,” said Yu Sheng Tay, an assistant vice president at Moody’s Ratings, as cited in Thursday’s rating action. He added: “These strengths are balanced by exposure to regulatory change and intense competition in the Philippines’ online gaming sector. DigiPlus’ growth ambitions in land-based casinos and overseas markets also introduce execution risk.” Moody’s said the B1 rating incorporated the likelihood of continued regulatory tightening in the Philippines, but did not assume an outright ban on online gaming. The rating agency also warned that DigiPlus’ “reliance on third-party game providers” limited its product differentiation. “The company livestreams certain games and is developing proprietary content to support user engagement and product differentiation, but these initiatives do not fully offset the competitive pressures in the market,” it said. Moody’s also noted that DigiPlus’ growth plans “introduce execution and financial risks”. It pointed out that the company plans to expand into land-based casinos, “driven partly by a more favourable hybrid gaming tax structure”. DigiPlus’ investment in convertible notes issued by International Entertainment gives the Philippines-based company the option to acquire majority control of the Hong Kong-listed firm upon conversion. Such step would increase DigiPlus’ exposure to International Entertainment’s capital commitments through 2033 related to LaVie Resort & Casino Manila, Moody’s stated. DigiPlus is also expanding into the Brazilian and South African online gaming markets, although combined capital spending is “modest” at “around PHP650 million” over the next two years, said the ratings agency. In addition, DigiPlus plans to apply for an online gaming licence in New Zealand. Despite these initiatives, DigiPlus’ credit metrics remain “strong”, Moody’s stated. The institution expects the firm’s leverage to remain below 0.5 times over the next 12 to 18 months, absent significant acquisitions or investments. Moody’s nevertheless observed that DigiPlus’ target of keeping net debt to EBITDA below 3.0 times indicated that it had the “capacity and willingness to take on additional debt to fund growth”. As of June 30, the company held PHP10.5 billion in cash and cash equivalents. Together with projected operating cash flow of PHP19.5 billion, these resources “will be sufficient to cover capital spending of PHP7.6 billion, scheduled debt maturities of PHP1.3 billion, and shareholder returns of PHP4.2 billion through December 2027,” Moody’s said.