+ Higher distribution. Interim distribution rose 1.1% YoY 2.65 cents. This is modestly higher than our expectations of unchanged distribution for the year. NetLink is paying out S$103mn in distributions from free-cash flow of around S$80mn. The balance is topped up from cash held in reserves.
– Another weak quarter of residential connections. Residential connections increased by only 2,369 in 2Q24, the weakest in eight quarters. We believe delays or renovation periods before moving into the new homes drove the sluggishness.
– Finance cost rose 30% YoY. The unhedged portion of S$735mn gross debt continued to be a drag on cash-flows. Net finance cost rose 30% to S$9.2mn. Assuming the current interest rate hedged loan of S$510mn is repriced upwards by 300 bps, the distribution could be negatively impacted by around 7.5%.