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Broker's take: OCBC initiates coverage on NetLink NBN Trust, issues 'buy'

OCBC Investment Research has initiated coverage on NetLink NBN Trust with a "buy" rating with a fair value estimate of S$0.91.

With the increasing use of fibre broadband services and a resilient business model, OCBC analyst Eugene Chua expects NetLink to "weather through various economic cycles given the defensive nature of its income streams".

Moreover, given its position as the sole provider of residential fibre networks in Singapore, Mr Chua believes NetLink will gain from the development of new residential areas which may also result in higher penetration rates for fibre broadband services.

The analyst also expects NetLink to be a key participant of growth in other connected services within the non-residential and non-building address points spaces.

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OCBC's rating and fair estimate of the stock also took into account NetLink's stable earnings outlook and its policy to distribute 100 per cent of its cash available for distribution.

NetLink's IPO (initial public offering) in July 2017, which raised S$2.3 billion, is the biggest in Singapore since 2011, when Hutchison Port Holdings Trust raised S$7.6 billion.

NetLink shares were trading S$0.005 or 0.6 per cent down at S$0.815 as at 11.24am.

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