NetLink NBN Trust

NetLink NBN Trust | Buy

Fair value: S$0.91

March 14 close: S$0.815

OCBC Investment Research, March 14

With the increasing usage of fibre broadband services for day-to-day activities driven by growing demand for connectivity and rapid broadbased growth in data consumption, we believe NetLink NBN Trust (NLT NBN) has a resilient business model, and is hence able to weather various economic cycles given the defensive nature of its income streams.

Given NLT NBN's current dominant position as the sole nationwide provider of residential fibre network in Singapore, we believe that there is room to grow with the development of new residential areas as well as increase in penetration rates. Furthermore, we expect NLT NBN to be a key participant of growth in other connected services within the non-residential and NBAP (non-building address points) space, especially with Singapore's push to transform into a digital economy.

All things considered, given its stable earnings outlook coupled with policy to distribute 100 per cent of its cash available for distribution, we value NLT NBN based on a dividend discount model.

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