SINGAPORE (Mar 14): OCBC is initiating Netlink NBN Trust (NLT NBN) at “buy” with a target price of 91 cents.
In a Wednesday report, analyst Eugene Chua says, “NetLink NBN Trust’s (NLT NBN) nationwide network, in our view, is the foundation of the Next Generation Nationwide Broadband Network (Next Gen NBN) over which ultra-high-speed internet access is delivered throughout mainland Singapore and its connected islands.”
Currently, NLT NBN’s network is the only fibre network with nationwide coverage in Singapore.
The analyst believes that the group has a resilient business model, since the usage of fibre broadband service have been increasing due to the growing demand to stay connected and rapid growth in data consumption from both residential and non-residential end-users.
“Hence, we believe NLT NBN will be able to weather through various economic cycles given the defensive nature of its income streams,” says Chua.
Looking ahead, the analyst believes that the group has room to grow with the development of new residential areas as well as increase penetration rates.
NLT NBN is also expected to be a key participant of growth in other connected services within the non-residential and Non-Building Address Points (NBAP) space, especially with Singapore’s push to transform into a digital economy.
The analyst expects the group to deliver distributions to unitholders of $170.1 million in FY18 on an annualised basis, $181.1 million in FY19 and $185.4 million in FY20.
As at 11.32am, shares in Netlink NBN are trading at 82 cents.
