NetLink NBN Trust - Maybank Research 2024-08-05: Foundation Of Stability

• NetLink NBN Trust (SGX:CJLU)'s 1QFY25 earnings fell by 9% y-o-y, whereas revenue and EBITDA declined by 3% and 2% y-o-y.

Stable on the surface

• Revenue decline was mainly owing to lower low-margin and often bumpy ancillary projects revenue whereas its key regulated asset base (RAB) revenue was stable despite the lower regulatory pricing kicking in from April 2024.
• - Read this at SGinvestors.io -

Operating metrics – mild surprises but not concerning

• NetLink posted stable RAB revenue y-o-y despite reduction in its regulated pricing from April 24. Residential connections increased by a strong 17,375 vs a run rate of ~6,000 in previous quarters.
  • Management attributed this to telcos’ promotions of 10Gbps fibre offerings and WiFi7 router offerings, which might have attracted new take-ups without terminating existing lower speed contracts (to avoid termination penalties).
  • - Read this at SGinvestors.io -
• On the other hand, NBAP (non-building address point) connections surprisingly fell 1% q-o-q.
  • Management expects the rise in residential connections to reverse and expects growth momentum in NBAP connections to resume.

Earnings forecast trimmed

• Read more at SGinvestors.io.

Hussaini Saifee Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-05 SGinvestors.io

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