NetLink NBN Trust - DBS Research 2022-03-09: Attractive 5.4% Yield For Its Low-Risk Profile

NetLink NBN Trust - Attractive 5.4% Yield For Its Low-Risk Profile

Published:
NETLINK NBN TRUST (SGX:CJLU) | SGinvestors.ioNETLINK NBN TRUST (SGX:CJLU)
  • In terms of sensitivity, we estimate that each 10-basis point rise in regulatory rate would have a +1% impact on NetLink NBN Trust (SGX:CJLU)'s EBITDA and vice versa.
  • When NetLink debuted on the Singapore Stock Exchange (SGX) in July 2017, the 10-year Singapore bond’s yield was 2.1%. Currently, these risk-free bonds offer a yield of 1.9% and DBS Research projects bond yields of 2.10%/2.15% by the end of 2022F/23F.
  • - Read this at SGinvestors.io -

Regulatory objective of lower residential interconnect rate can be achieved with stable regulatory rate of 7% in our view.

  • The number of residential connections has risen from 1.19m in FY18 to 1.46m in FY21, rising by 21% overall. On the other hand, RAB has gone up by ~3% over the same period to ~S$2.4bn in our estimates. As such, we estimate that residential interconnect rate of S$13.80 per month could drop by 10%-12% to maintain 7.0% rate of return on RAB. This might lead to a 6% decline in NetLink's FY24F EBITDA which will start inching up again with growth in subscribers and reach a new high in FY27F.
  • - Read this at SGinvestors.io -

With annual operating cash flow of ~S$270m, we don’t see any issue with Netlink’s distributions of ~S$200m.

  • Read more at SGinvestors.io.



Above is an excerpt from a report by DBS Group Research.
Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.



Sachin MITTAL DBS Group Research | https://www.dbs.com/insightsdirect/ 2022-03-09



Read also DBS's most recent report:
2025-05-16 NetLink NBN Trust - 6% Yield Largely Insulated From Macro Outlook.

Previous report by DBS:
2025-02-11 NetLink NBN Trust - 3QFY25 Results In Line Led By Residential Connections.

Price targets by 4 other brokers at NetLink Trust Target Prices.

Listing of research reports at NetLink Trust Analyst Reports.

Relevant links:
NetLink Trust Share Price History,
NetLink Trust Announcements,
NetLink Trust Dividend Payout Dates & Corporate Actions,
NetLink Trust News






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