NetLink NBN Trust - Stable Performance
- NetLink Trust (SGX:CJLU)’s FY22 core net profit of S$103.7m (+7.6% y-o-y) was in line with our expectations, at 102% of our FY22F forecast. FY22 dividend of S$0.0513 per share represents a 5.2% dividend yield, in line with expectations.
- NetLink Trust is currently undergoing review of its services (including pricing) offered under its interconnection offer (ICO) for the next review period (2023-2027) with Infocomm Media Development Authority (IMDA). NetLink Trust expects the review to only be completed in early 2023, mainly due to additional time required for IMDA to complete the public consultation process on changes in certain non-price terms and conditions.
- With a rising rates environment, we believe concerns over a cut in regulatory WACC should subside. We conservatively price in a 3% reduction in ICO pricing for the next review period in our forecasts, given a higher denominator (with increase in number of fibre connections), but believe that NetLink Trust’s strong operating cash flow generation can continue to support stable DPU growth of ~1.5% p.a. without meaningfully impacting its debt profile.
- Reiterate ADD call on NetLink Trust.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-05-18 2022-05-18
Previous report by CGS-CIMB:
2022-02-16 NetLink NBN Trust - Stronger Connection Growth
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