Maybank Research Pte Ltd

May 19, 2025

Netlink NBN Trust: A Deep Dive into FY25 Performance and Future Outlook

Netlink NBN Trust (NETLINK SP): FY25 Operating Metrics in Line, Dividend Beats Consensus

Netlink NBN Trust’s FY25 performance reveals a mixed bag, with operating metrics generally aligning with expectations, while the dividend payout exceeded consensus estimates. A closer examination reveals key insights for investors.

2H25/FY25 Review: NPAT Misses Expectations

• FY25 earnings experienced a 6% year-over-year decline, falling 6% below Street expectations.
• Revenue and EBITDA also saw a 1% year-over-year decrease, missing Street estimates by 2%. [[1]]
• However, higher-margin Regulated Asset Base (RAB) revenue is showing signs of stabilization as rising connections help offset the regulatory price cut implemented in Apr’24. [[1]]

Dividend Declaration: A Positive Surprise

• Despite the earnings dip, Netlink declared a final dividend of SGD2.68 cents, bringing the full-year dividend to SGD5.36. [[1]]
• This represents a 1% year-over-year increase and surpasses Street expectations by 1%. [[1]]
• The FY25 dividend translates to an attractive 6% dividend yield, deemed highly sustainable. [[1]]

Operating Metrics: Stability or Growth?

• Residential connections rebounded strongly in 4Q25, rising by 6,000 quarter-over-quarter, suggesting a recovery from elevated churn rates in 2Q25-3Q25. [[1]]
• Non-residential connections remained relatively flat quarter-over-quarter. [[1]]
• NBAP and segment connections maintained strong growth in 4Q25, posting 6% and 3% quarter-over-quarter growth, respectively. [[1]]
• Growth in NBAP and segment connections is supported by Smart Nation and cloud-based service deployments, remaining a key area of focus for FY26E growth. [[1]]-[[2]]

Investment Recommendation: Maintain BUY, Raising Target Price

• FY26-27 earnings forecasts revised down by 8-9% after factoring in FY25 results. [[2]]
• Revenue/EBITDA forecasts trimmed by only 1%. [[2]]
• Dividend payouts are based on cash available for distribution, not a percentage of earnings. [[2]]
• DDM-based TP raised by 3% to SGD1.0 due to a higher dividend assumption. [[2]]
• DCF valuation rolled forward, with a slightly lower Weighted Average Cost of Capital (WACC) of 6.9% (down from 7.0%). [[2]]

Netlink’s Resilient Business Model

• Revenue and cash flows are resilient, underpinned by a stable business model. [[2]]
• Netlink stands to benefit significantly as the interest rate cycle turns. [[2]]
• The stock exhibits a 71% negative correlation with the 10-year US bond yield. [[2]]
• The 6% dividend yield remains highly visible and stable. [[2]]
• A strong balance sheet, with a net debt to EBITDA ratio of 2.4x. [[2]]

Key Statistics

• Share Price: SGD 0.91 [[3]]
• 12m Price Target: SGD 1.00 (+10%) [[3]]
• Previous Price Target: SGD 0.97 [[3]]
• Recommendation: BUY [[3]]
• 52w high/low (SGD): 0.94/0.82 [[3]]
• 3m avg turnover (USDm): 3.5 [[3]]
• Free float (%): 75.2 [[3]]
• Issued shares (m): 3,897 [[3]]
• Market capitalisation: SGD3.5B / USD2.7B [[3]]

Major Shareholders

• Singapore Telecommunications Ltd.: 24.8% [[3]]
• The Vanguard Group, Inc.: 2.7% [[3]]
• CBRE Investment Management Listed Real A: 1.5% [[3]]

Price Performance