NETLINK NBN TRUST (SGX:CJLU)
NetLink NBN Trust - Stable As Expected
- NetLink Trust (SGX:CJLU)'s revenue and EBITDA in FY21 modestly below expectations, at 98%/95% of our FY21e forecasts due to write-off of IT assets.
- NetLink Trust's FY21 DPU up 0.6% y-o-y to S$0.0508 (FY20: S$0.0505). Current annual distribution of S$198mn backed by operating cash flows of S$264mn.
- Core residential revenue expanded 1.5% y-o-y in 2H21, in tandem with a 1.4% improvement in fibre connections to 1.44mn. Net adds slowed down to 9,424 residentials in 2H21 (1H21 9,915; 2H20 16,818).
- ACCUMULATE rating and DCF target price of S$1.03 (WACC 5.9%) for NetLink Trust unchanged. Dividend yield of 5.2% supported by monthly recurring revenue from 1.44m residential fibre connections.
The Positive
Core residential revenue stable.
- Core residential revenue was up 1.5% y-o-y in 2H21 to S$119.4mn as it added 9,424 residential connections. The impact of the pandemic was indirect, from a slower build-out of homes in the country. Our forecast for FY22e connections is 25,000 net additions (FY21: 19,339).
The Negative
Non-residential and ducts & manholes the weaker spots.
- Non-residential revenue contracted 4% y-o-y despite a modest 0.9% y-o-y improvement in connections to 48,108. Competition had resulted in rebates for customers. Ducts are expected to decline further with a drop in customer projects.
Outlook
- We expect another stable year in FY22e. Capex should be higher as reflected by a S$12.4mn rise in capital commitments to S$48.7mn. NBAP revenue is likely to gain traction from 5G rollout, although contributions remain marginal at 3% of revenue.
Maintain ACCUMULATE and target price of S$1.03
- NetLink Trust generates stable 5.2% distribution yields. Lockdowns will only result in delays in installations, diversions and co-location revenue, which account for a combined 13% of revenue.
- Growth to be sustained by estimated 25,000 new residential homes per year. NetLink Trust is exploring telecommunication infrastructure opportunities overseas, including emerging countries and minority stakes.
- See
Paul Chew
Phillip Securities Research
|
https://www.stocksbnb.com/
2021-05-16
SGX Stock
Analyst Report
1.030
SAME
1.030
