NETLINK NBN TRUST

NETLINK NBN TRUST | BUY

OCT 11 CLOSE: $0.775

FAIR VALUE: $0.90

OCBC Investment Research, Oct 11

TPG Telecom's entry, while a headwind to varying degrees for the incumbents, is positive for NetLink NBN Trust.

TPG would need to tap NetLink's fibre network infrastructure to connect a substantial portion of its base stations, potentially contributing to NetLink's non-residential and non-building address point revenue. With macro concerns ratcheting up, defensive names like NetLink have proven to be resilient.

Over the last three months, NetLink has achieved a total return of 6.1 per cent, relative to the negative 1.1 per cent and negative 2.8 per cent registered by the FTSE ST Real Estate Investment Trusts Index and Straits Times Index, respectively.

We do acknowledge the inherent concerns with NetLink's regulated business structure – for example, regulatory review risks and uncertain opportunities in growing the regulated asset base – but these are relatively unaffected by the ongoing trade tensions. We continue to stay constructive on NetLink and retain our fair value estimate of 90 cents.

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