Roxas & Company\u00a0[RCI 3.50, down 4.6%; 28% avgVol] [link] disclosed that one of its independent directors,\u00a0Aurelio Montinola, tendered his resignation in a letter dated May 6 after RCI sold 250 million treasury shares at a steep discount to a company owned and controlled by his wife,\u00a0Ging Gonzalez-Montinola. The shares w ere sold to Ms. Gonzalez-Montinola\u2019s company, Stonebridge Corp, at P2.00\/share, which was a 38% discount to RCI\u2019s pre-announcement price and a 47% discount to RCI\u2019s market price in the trading session immediately following the announcement. The reason RCI listed for Mr. Montinola\u2019s resignation was, \u201c[N]o longer qualified to serve as an Independent Director.\u201d<\/p>\n
MB bottom-line:\u00a0Independent directors are meant to be the \u201cadult in the room\u201d so to speak, to help ensure that a company operates in a legal and ethical way. They\u2019re supposed to be free of any incentives that could cloud their judgment and cause the company to make decisions that favor non-public interests ahead of those of the public shareholder class. So, while it is entirely appropriate for Mr. Montinola to tender his resignation as an independent director after selling his wife a 9% stake in the company at a sweetheart price, it feels like there\u2019s more to the story. How is it in the best interest of public shareholders for the management team to sell a massive block of shares at such a low price? They raised P500 million selling shares that were worth P800 million to P930 million. By selling to Mr. Montinola\u2019s wife, the management team could have left P300 to P430 million \u201con the table\u201d. That\u2019s not very independent. The optimist in me had a\u00a0sensible chuckle\u00a0at the thought of Mr. Montinola being like, \u201cGuys, please, let\u2019s sell to anybody but my wife! Just think of my independence!\u201d, and then the evil RCI board laughing maniacally as they called Ms. Gonzalez-Montinola on speakerphone in front of Mr. Montinola just to vex him and rub his face in the impropriety of the deal. Was the sale a \u201cpoison pill\u201d to prevent Leandro Leviste from taking some control from RCI\u2019s management group? In the end, I don\u2019t care. This sale stinks for public shareholders and makes a mockery of what it means to be an independent director. Retail investors should take this as instructive of the limits of what may be expected from the protections afforded by independent directorships.<\/p>\n
—<\/p>\n
Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the\u00a0newsletter\u00a0or\u00a0follow on Twitter\u00a0to receive the full daily updates.<\/p>\n
DigiPlus Interactive\u00a0[PLUS 12.76, down 4.6%; 79% avgVol] [link] reported a Q1 net income of P2.0 billion, up 370% y\/y from its Q1\/23 net income of P0.4 billion. PLUS attributed its performance to revenue increases in all of its material business segments: retail games (+237%), casino rental income (+30%), hosting fees (+19%), and other leases (+12%). In the \u201cFUTURE PLANS\u201d portion of the Management\u2019s Discussion and Analysis section, PLUS said that it \u201ccontinues to execute on its… vision to be the number one digital entertainment group in the Philippines.\u201d PLUS said that it is looking to boost customer retention through the use of \u201cbig data technologies\u201d and plans to \u201cembark on aggressive marketing efforts\u201d to \u201cenhance customer engagement.\u201d The group\u2019s Franchise Fees and Taxes expense grew 201% y\/y to P6.8 billion, but this is the amount that PLUS pays PAGCOR and the government as a percentage of its gross gaming revenue.<\/p>\n
MB bottom-line:\u00a0It\u2019s going to be interesting to see how PLUS handles the \u201cproblem\u201d of making too much money. Will it treat these huge quarters like a windfall profit and distribute some large amount of it back to shareholders through a dividend, or will it look to put the money to work? If the management team wants to use the cash for something constructive, how will it configure its investment spend between research and development of its digital gambling platform and more conservative sources of recurring income like land and buildings? The FUTURE PLANS section tells me that they\u2019re not finished building out PLUS into what it could be, so shareholders should probably expect the company to allocate a good amount to realizing that ambitious goal to become our \u201clargest digital entertainment group\u201d.\u00a0<\/p>\n
—<\/p>\n
Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the\u00a0newsletter\u00a0or\u00a0follow on Twitter\u00a0to receive the full daily updates.<\/p>\n","protected":false},"excerpt":{"rendered":"
Roxas & Company\u00a0[RCI 3.50, down 4.6%; 28% avgVol] [link] disclosed that one of its independent directors,\u00a0Aurelio Montinola, tendered his resignation in a letter dated May 6 after RCI sold 250 million treasury shares at a steep discount to a company owned and controlled by his wife,\u00a0Ging Gonzalez-Montinola. The shares w ere sold to Ms. Gonzalez-Montinola\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[295],"tags":[3855],"class_list":["post-2415","post","type-post","status-publish","format-standard","hentry","category-StockCommentary","tag-ROXASANDCOMPANY"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/asianews.ph\/index.php?rest_route=\/wp\/v2\/posts\/2415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/asianews.ph\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/asianews.ph\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/asianews.ph\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/asianews.ph\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2415"}],"version-history":[{"count":0,"href":"https:\/\/asianews.ph\/index.php?rest_route=\/wp\/v2\/posts\/2415\/revisions"}],"wp:attachment":[{"href":"https:\/\/asianews.ph\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/asianews.ph\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/asianews.ph\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}