NetLink NBN Trust - DBS Research 2023-01-10: Attractive 6.5% Yield Amid Lower Risk-Free Rate

NetLink NBN Trust - Attractive 6.5% Yield Amid Lower Risk-Free Rate

  • NetLink Trust's share price is trading at 12-month forward distribution yield of 6.5%, implying yield spread of 360bps. Singapore Government’s 10-year bond yield has shrunk to 2.9% (3.5% in Nov 2022) implying a yield-spread of 360bps (similar to its average spread since IPO), but higher than last 12-month average of 290bps.
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  • We estimate every 10 basis point change in regulatory WACC would have a +1% impact on its EBITDA and forecast a 300-500 basis point hike in regulatory WACC. In terms of timeline, we expect a revised regulatory WACC to be announced in the first half of calendar year of 2023. Despite a higher regulatory WACC, NetLink Trust may raise its distributions by only 2%-3%, in our view, as it focuses on the long-term sustainability of its distributions.

Upgrade NetLink Trust to BUY with a higher target price of S$0.98.

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Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Sachin MITTAL DBS Group Research | 2023-01-10

Read also DBS's most recent report:
2023-05-23 NetLink NBN Trust - 6% Yield Largely Independent Of Macro Outlook.

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 Dividends & Corporate Actions,
NetLink Trust News Articles


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