- NetLink Trust's 1QFY26 earnings declined 9% y-o-y and is trending at 23% of MIBG and street full-year expectations.
Slight NPAT miss.
- While revenues rose 2% y-o-y, this was mainly due to low margin ancillary project revenues while high-margin connection revenues dipped slightly due to a one-off subs clean-up exercise by its Requesting Licensees (RLs).
- - Read this at SGinvestors.io -
Operating metrics – Slight subs clean-up is one-off.
- Residential broadband connections dipped 10k, or -0.7%, primarily due to Requesting Licensees (RLs) deactivating dormant lines as part of ongoing housekeeping. Management noted that based on its discussion with key RLs, the clean-up is mostly done, and, at the same time, gross addition trajectory remains intact. Non-Residential connections also fell 0.7%, on end-user migration between RLs.
- - Read this at SGinvestors.io -
Maintain BUY.
- Despite a slight EBITDA decline, management noted that it is minimalistic and one-off in nature and, as such, unlikely to impact its dividend trajectory.
- We see NetLink Trust as a bigger beneficiary as the interest rate cycle turns. NetLink Trust's share price has 71% negative correlation to the 10-year US bond yield while its 6% dividend yield remains highly visible and stable.
Dividend trajectory remains intact.
- Read more at SGinvestors.io.
