DigiPlus Interactive Corp. has room to take on additional debt to finance its expansion while maintaining relatively low leverage, Moody’s Ratings said after assigning the gaming company a first-time B1 corporate family rating with a stable outlook.

The rating agency said DigiPlus’ target of keeping net debt below three times earnings before interest, taxes, depreciation, and amortization (EBITDA) indicates that the company has both the capacity and the willingness to borrow more to fund growth.

Moody’s expects DigiPlus’ leverage to remain below 0.5 times over the next 12 to 18 months, assuming the company does not pursue significant acquisitions or investments.

“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,” Moody’s Ratings Assistant Vice-President Yu Sheng Tay said in a statement e-mailed to journalists on Thursday.

DigiPlus had P10.5 billion in cash and cash equivalents as of June 30 and was in a net cash position, Moody’s said.

The company’s cash balance, combined with projected operating cash flow of P19.5 billion, should be enough to cover P7.6 billion in capital spending, P1.3 billion in scheduled debt maturities, and P4.2 billion in shareholder returns through December 2027, according to the rating agency.

DigiPlus is expanding into land-based casinos and overseas gaming markets, including Brazil and South Africa. It also plans to apply for an online gaming license in New Zealand.

Moody’s expects combined capital spending for the company’s Brazil and South Africa expansion to reach about P650 million over the next two years.

DigiPlus has also invested in convertible notes issued by International Entertainment Corp. (IEC), giving it the option to acquire majority control of IEC if the notes are converted.

A conversion would increase DigiPlus’ exposure to IEC’s capital commitments through 2033 related to LaVie Resort & Casino Manila, Moody’s said.

The rating agency nevertheless identified execution and financial risks associated with DigiPlus’ expansion into land-based casinos and overseas markets. It also pointed to the risks posed by regulatory changes and competition in the Philippine online gaming sector.

“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,” Mr. Tay said.

Moody’s expects DigiPlus’ EBITDA to fall to about P11.4 billion this year from P14.3 billion in 2025.

The agency attributed the projected decline to the central bank’s August 2025 directive requiring mobile wallet and payment providers to delink in-app access to online gaming platforms. It also cited weaker consumer sentiment resulting from higher fuel prices and broader inflationary pressures.

EBITDA is expected to recover to about P14 billion to P15 billion in 2027 and 2028, supported by organic growth and contributions from the consolidation of IEC and overseas investments, Moody’s said.

Moody’s estimates that DigiPlus holds a 38.5% share of the Philippine online gaming market and has around six million monthly active users. The company operates more than 1,000 games spanning bingo, electronic gaming, and sports betting.

Tighter regulation could accelerate consolidation in the online gaming industry and benefit larger incumbents with sufficient scale, financial resources, and the ability to adapt, the rating agency said.

“The stable outlook reflects our view that DigiPlus will maintain its leading position in the Philippines’ online gaming sector and grow its earnings over the next 12-18 months, adapt to evolving regulations, and execute its growth plans prudently,” Moody’s said.

Moody’s said it could consider an upgrade if DigiPlus maintains its domestic market position, operates through periods of regulatory tightening without a significant deterioration in earnings or cash flow, and improves revenue diversification through successful expansion.

A sustained debt-to-EBITDA ratio below three times could support an upgrade, while a ratio above 3.5 times could place downward pressure on the rating.

“A nationwide prohibition on online gaming in the Philippines is likely to result in a multi-notch downgrade as online gaming accounts for most of DigiPlus’ revenue,” Moody’s said.

The B1 rating is five notches below the Baa2 scorecard-indicated outcome, reflecting DigiPlus’ exposure to regulatory changes, relatively short operating track record, and growth appetite, Moody’s said.

DigiPlus shares fell 3.1% to P9.06 apiece on Thursday. — Alexandria Grace C. Magno