NetLink NBN Trust’s (NLT NBN) 3QFY19 beat its IPO projections across a number of metrics. Revenue of S$89.0m was 3.4% higher than forecast, brought about by higher diversion revenue as well as ducts and manholes service revenue. Similar to preceding quarters, these were partially offset by lower than projected installation-related revenue.

Total expenses of S$71.7m was 0.4% lower than projection, largely on the back of lower depreciation and amortisation expenses, finance costs and other operating expenses. EBITDA margin was firm at 70.6%, which was in-line with projections. 3QFY19 PAT came in at S$19.6m, or 17.6% higher than projection.

Operationally, we note that NLT NBN has grown its number of residential fibre connections by 3.4% since 30 Sep 2018 to 1.284m connections, surpassing its projection of 1.278m connections by the end of FY19.

We maintain our BUY rating, but place our fair value of S$0.90 under review pending an analyst briefing.

Source: OCBC Research - 14 Feb 2019