+ Resilient broadband growth. Broadband subscriber net adds were 9,000 in 2Q21, the highest on record. Attractive pricing plus partnerships with various mobile operators helped.
+ Capex structurally lower. Capex trended at 25-30% of revenue from 2015 to 2017. 1H21 capex declined to a low of 11% of revenue. Investments in fibre have peaked and capacity is sufficient to meet current growth in broadband subscribers and future 5G data backhaul requirements.
– Cable TV still declining. Cable TV revenue fell 3% YoY to S$56.7mn The decline was evenly spread between subscriptions and non-subscriptions. Cable TV subscribers are on a secular decline due to piracy and over-the-top TV. Broadband will be key to revenue sustainability.
Expect stable operations. Group revenue is dependent on broadband to stem the decline in cable TV. Adjusted FCF remains strong at S$82mn, far exceeding its S$18mn dividends. FY22e dividends will be guided in 3Q21 results.
Maintain BUY and target price of S$0.15
Current yield of 7.6% is well-covered by healthy cash flows. Catalysts are expected from 5G data backhaul, though the timing is unclear as mobile operators have been prudent on spending.