In terms of growth, Netlink could benefit from the Singapore government’s recently announced initiative to develop a new digital connectivity blueprint. The plan includes the development of future-ready broadband, mobile and Wi-Fi infrastructure. In a press release, Netlink says it will provide its expertise and infrastructure to support the upgrade of the NBN that will deliver internet speeds of up to 10Gbps.
Netlink NBN Trust(SGX:CJLU
) is interesting because it is internally managed but has not made an acquisition since its IPO in 2017 at 81 cents per share. As a result, its unit price has managed to appreciate 91 cents as at May 24. At this price, based on its historical FY2023 ended March DPU of 5.24 cents, its yield is around 5.75%. Netlink’s DPU has been steadily increasing since its IPO. In FY2018, FY2019, FY2020, FY2021 and FY2022, DPU was 3.24 cents, 4.88 cents, 5.05 cents, 5.08 cents and 5.13 cents, respectively.
Since Netlink is internally managed, it is not under pressure to make an acquisition. That has helped take the pressure of equity fundraising off the unit price. However, a possible drawback is its business model. As the owner of the fibre network of Singapore’s National Broadband Network (NBN), pricing is highly regulated. On the other hand, Netlink is in a very defensive sector — so long as it is not open to competition.
