In a report released today, Sachin Mittal from DBS maintained a Buy rating on NetLink NBN (NETLF – Research Report), with a price target of S$0.98.
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Sachin Mittal has given his Buy rating due to a combination of factors influencing NetLink NBN’s performance. One of the key reasons is the company’s strong position as a monopoly in Singapore’s fiber network, which ensures stable and predictable revenue streams. Despite the adverse impact of lower interconnect rates in FY25, NetLink NBN is expected to see an increase in revenue over the next four years, supported by a fixed interconnect rate and a secured 7% regulatory return from April 2024.
Additionally, the attractive yield spread of 330 basis points, which is higher than the four-year average, supports the potential for a rise in share price. The company’s strong balance sheet and liquidity levels further enhance its ability to generate stable cash flows, supporting future capital expenditures and distributions. The expected annual increase in distribution per unit (DPU) by 1-2% also contributes to the positive outlook, maintaining a target price of SGD0.98.
In another report released yesterday, UOB Kay Hian also maintained a Buy rating on the stock with a S$0.98 price target.