- 1H27 revenue/EBITDA were within expectation at 49%/50% respectively of FY27e forecast. 1H27 EBITDA eked out a 0.8% improvement to S$144.6mn. DPU climbed 1.1% YoY to 2.74 cents.
- Residential fibre connections are recovering from operators' exercise of removing inactive connections. Other operating costs were lower due to the absence of a S$1.3mn write-off in the prior year and an undisclosed reversal of an over-accrual of maintenance costs.
- We maintain of FY27e forecast and target price of S$0.96. Our recommendation is upgraded to ACCUMULATE from NEUTRAL, following the recent share price weakness. NetLink’s distribution yield of 5.9% is supported by stable cash flows and finance costs that have been 100% hedged at a 2.4% interest rate. However, we expect cost and margin pressures from IT, staff, and maintenance in FY27e following the completion of Seletar. The current yield is attractive at present, but Netlink is exposed to a rising inflationary and interest rate environment.
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