Between October and December last year, the PLUS director went on a buying spree, scooping up 10 million shares at around P21 each.
With DigiPlus rallying over 30 percent since the start of the year to a fresh all-time high, he’s sitting on unrealized gains of close to P150 million after just a few months.
Ocier, the chair of SM-backed Belle Corp. who's also investing in rival gaming platforms, has foreign brokerage house CLSA to thank for PLUS' recent price jump, which has already made it more valuable than several of the country’s top conglomerates.
And there’s room for upside after CLSA made a bold call, hiking its target price by 63 percent from P34 per share to P55.40 apiece over the next 12 months.
What CLSA said
In a report last Feb. 12, CLSA’s Amos Ong rated PLUS a “high conviction outperform,” which pushed the stock higher to a recent all-time high of P36.15 per share.
“We attribute PLUS’s ambitious expansion to its strong tech and [research and development] capabilities, which we believe will remain its competitive edge over the next few years,” Ong noted in the report.
He also expects the company to achieve an average of 40 percent return on equity and 12 percent free cash flow yield in the 2025-2026 calendar year (CL).
“We are confident that PLUS will continue to post double-digit earnings growth in 25-26CL, similar to Philippines consumer peers. We lift our 26CL target [price earnings ratio] from 9.6 times to 12.6 times (in line with the domestic consumer peer average),” he said.
Staying ahead of competition
PLUS, chaired by tycoon Eusebio Tanco, is set to maintain its edge even with new competition cropping up.
Its partially opened Parañaque facility provides room for domestic expansion, while its monthly active users are projected to grow from 4.6 million in Q3 2024 to 6 million by end-2026, Ong said.
Revenues per user are also expected to be maintained at P1,300 as it expands gaming in provincial locations.
Ong said PLUS’s strong net cash position allows it to pursue expansion plans, including potential acquisitions in Brazil, while maintaining dividend payouts of at least 20 percent. The dividend yield is projected to rise from 0.5 percent in 2024 to 2 percent in 2026.
PSE index play?
Valued at about P155 billion, PLUS is already larger than four other conglomerates and all of its gaming peers.
If CLSA’s price target is met, the company would be worth more than P240 billion, which is larger than the current value of Aboitiz Equity Ventures and San Miguel Corp.
AP Securities research head Alfred Benjamin R. Garcia said in a report that PLUS is among the highest-valued stocks among peers.
Despite this, he said there’s room for growth, pointing out that even with an estimated P12.1 billion in net income for 2024, PLUS’s valuation remains just above half of Jollibee Foods, which likely ended the year with P10.6 billion in earnings.
PLUS readies expansion program
Meanwhile, the company is setting aside P2.5 billion to P3 billion for capital expenditures this year, covering its Brazil expansion and infrastructure upgrades.
Vice president for investor relations Celeste Jovenir said the amount includes P660 million for Brazil’s initial investment and maintenance costs, which are all fully funded.
What’s next?
With PLUS rallying about 2,300 percent since early 2022, is Ocier thinking about selling?
In a message to InsiderPH, he suggested there would be a period consolidation since the price is still “adjusting to the new levels.”
Is this a sign for traders to follow insider moves? If only it were that easy.
While Ocier was buying, another major PLUS shareholder, political figure Alfredo “Albee” Benitez, was selling millions of shares just before the major price upgrade.
It goes to show that even insiders don’t always play the same hand, at least, not out in the open.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
