Half-yearly Results - NetLink NBN Trust

NetLink Trust (SGX: CJLU) just announced her FY21 Results (Apr 20 to Mar 21). I'll be going through some of the numbers, as well as providing my personal take on the counter. For those who are new to NLT, you can check out this post, which provides a more comprehensive overview of the company's segments.

Overview

NLT derives recurring income from maintaining fibre connections for different customers. It is dominated by Residential Connections at over 64% of FY21 revenue, along with non-residential, NBAP and Segment connections. 

Residential connections saw the steepest slowdown in growth over the last 4 quarters, potentially due to a slowdown in the construction sector. NBAP maintained high growth, with continued support by the SmartNation initiatives.

Revenue Breakdown

Non-residential connections saw a drop in revenue, for both the half and full year comparison basis. This was attributed to higher rebates provided to Requesting Licensees (RLs). 

The 2H comparison shows a recovery for Installation/Diversion/Co-location revenue segments. Overall there was still a decline over the full FY due to significant pandemic impact in 1H21.

Others

In whole, NLT reported a slight decline in operating revenue at 368.4 million compared to 370.2 million in the previous year. This slight decrease was compensated with higher government grants (eg. JSS), resulting in flat total revenue. 

This propagates down to a 4.6% increase in EBITDA, a 21.4% increase in Profit after Tax, and a 21.5% increase in EPU from 2 cents to 2.43 cents. 

NLT declared a distribution of 2.55 s-cents per unit, translating to an annualized yield of 5.2% based on the closing unit price of $0.98 on 11 May.

My Thoughts

This set of results look pretty solid to me, showcasing the resilience of NLT's business model. The performance for the next half should improve further as work picks up again, and it'll be interesting to see if the NBAP segment can continue the explosive growth and end up contributing significantly to the revenue pie in the coming years. Potential acquisitions would be interesting too!

While the unit price has been largely dormant in the last few months, I suppose there could be some volatility ahead as investors try to price in the changes to regulated returns (WACC).

Cheers,

InvestingNugget

Author's note:

At the point of writing, I am a shareholder of NetLink NBN Trust. I have put in my best effort to ensure that the facts are accurate, but I do not guarantee it. Opinions are my own and do not constitute any recommendations.