| OCBC | UOB |
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NetLink NBN Trust: A safe haven amid volatilities
NetLink NBN Trust (NLT NBN) designs, builds, owns and operates the passive fibre network infrastructure (comprising ducts, manholes, fibre cables and Central Offices) of Singapore’s Next Gen NBN. With the increasing usage of fibre broadband services for day-to-day activities driven by growing demand for connectivity and rapid broad-based growth in data consumption, we believe NLT NBN has a resilient business model, and hence able to weather through various economic cycles given the defensive nature of its income streams. Looking ahead, given NLT NBN’s current dominant position as the sole nationwide provider of residential fibre network in Singapore, we believe there is room to grow with the development of new residential areas as well as increase in penetration rates. Furthermore, we expect NLT NBN to be a key participant of growth in other connected services within the non-residential and NBAP space, especially with Singapore’s push to transform into a digital economy. All considered, given its stable earnings outlook coupled with policy to distribute 100% of its cash available for distribution, we value NLT NBN based on a dividend discount model. Deriving a S$0.91 fair value estimate, we initiate coverage on NLT NBN with a BUY rating.
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Singapore Press Holdings (SPH SP) Page Count: Pressure On Advertising Continues Unabated In 2QFY18
Our page count for 2QFY18 showed total ads falling 12.7% yoy, a moderation from the -13.6% in 1QFY18. A decline of this magnitude historically translated to 16-22% yoy decline in quarterly print revenue, and we lower our assumptions accordingly. With no fundamental improvements, a re-rating like its US-listed peers is unlikely. We trim our 2018-20 earnings forecasts by 1-2%. Maintain SELL with a lower target price of S$2.39.
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| MAYBANK KIM ENG | PHILLIP |
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Singapore Telcos TPG Scenarios: The Base, The Blue Skies & The Ugly
Not a pretty picture We review Info-Communications Media Development Authority (IMDA) regulations governing the spectrum rights recently acquired by TPG (TPM AU, Not Rated), to ascertain if there is an avenue for more positive scenarios for Singapore’s incumbents. Our conclusion is that the worst case scenario of a more aggressive tariff war cannot be ruled out, thus we maintain our NEGATIVE view on the sector. De-rating catalysts are expected from the start of operations by TPG or any insight into its tariff plans and strategy. Continue to HOLD Singtel and SELL StarHub and M1. Risks to our view include an early exit by TPG and/or robust growth in fixed broadband and enterprise.
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Phillip Singapore Monthly March 2018: New uncertainty emerges
14 March 2018 Market: STI was down only 0.5% in March. But this masked broader weakness in the market. Of its 30 component stocks, only eight posted positive returns. Half were banks and electronics. The market had a whiff of President Trump’s stance on international trade when he withdrew the US from the TPP shortly after his nomination. Since then, he has played down his trade rhetoric. It is now back on. He has declared trade wars as good and that they can be won. He has also exercised the US’ so-called nuclear option in trade by invoking national security as the reason for import tariffs. This is supposed to be used in times of emergency or war. While steel and aluminium only comprise 2% of the US’ imports and nothing concrete has been rolled out, his rhetoric has fanned new uncertainties. The fear is retaliation and an escalation of trade protectionism. Of concern will be the current US investigation into China’s violation of intellectual-property rights. It may result in the US restricting Chinese investments in US companies, tariff penalties on imports, and visa controls. What could hold back the President would be his own Republican Party members who have no interest in dialling back the current economic momentum as they head out to the 2018 mid-term elections.
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