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UOB KAYHIAN |
LIM & TAN |
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NetLink NBN Trust (NETLINK SP) FY25: Soft Results From Lower Prices, But Expect Growth In FY26
Netlink posted a lower FY25 revenue (-1.0% yoy), EBITDA (-1.5% yoy) and PATMI (-7.6% yoy) that fell below our expectations, dragged by lower interconnection prices and decreased ancillary project revenue. Despite the lower prices, FY25 RAB revenue was only down slightly (-0.5% yoy) as overall connections continue to grow. With stable revenue streams and operating cash flows, we continue to like Netlink as a highyielding, safe haven stock. Maintain BUY with the same target price of S$0.98.
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We highlight the key question and answer from Venture Corp’s ($11.33, up 0.01) AGM:
Mr Ong Poh Seng, a shareholder, queried how the Company uses its Share Buyback Plan to improve shareholder returns, and whether the Board would consider declaring a special dividend. In response, the Executive Chairman and the CFO explained that share buybacks improve the earnings per share by reducing the number of outstanding shares of the Company with the bought back shares being cancelled immediately upon acquisition. The Board views both cash dividends and share buybacks as being useful tools to improve shareholder returns over time. The Board regularly reviews both options, considering the Company’s performance, market conditions, and shareholder interests. The Executive Chairman acknowledged the suggestion on a special dividend.
At $11.33, Venture is capitalized at $3.3bln, trades at a forward PE of 13.5x, 1.1x book and yields 6.6%. Bloomberg consensus 1 year target price is $11.88, providing a potential capital return of 4.9%. Coupled with its attractive yield of 6.6%, total expected return is 11.5%. We have an “Accumulate on Weakness” rating on Venture Corp as we believe that despite its limited capital upside, it will continue to return capital via its share buy back program as well as sustainable and attractive 75 cents/year in dividends to shareholders as management’s strong historical track record would allow them to navigate cautiously and successfully through the current global economic trade war. |
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LIM & TAN |
UOB KAYHIAN |
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DFI Retail Group (US$2.69, down 4 cents) issued its Interim Management Statement for the first quarter of 2025. Overall macroeconomic conditions continue to evolve across the globe with rising uncertainty caused by geopolitical tensions. Guided by its purpose statement, the Group remains steadfast in its commitment to providing consumers with a stable supply of quality products and great value across its operating markets. The Group is closely monitoring consumer sentiment as the implications of the latest tariff development continue to unfold. While the situation remains fluid, the Group sees a manageable impact given that most procurement is done close to consumption, with U.S. imports representing less than 2% of underlying subsidiary sales in 2024. With enhanced sourcing capability and agile supply chain management, the Group is confident in its ability to navigate changing consumer behaviours and sentiment amidst macroeconomic headwinds.
DFI’s market cap stands at US$3.6bln and currently trades at 14.5x forward PE and 6.3x PB, with a dividend yield of 3.9%. Consensus target price stands at US2.90, representing 7.8% upside from current share price. Given fair valuations and limited upside based on consensus, we recommend a HOLD on DFI.
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Affin Bank (ABANK MK) 1Q25 Earnings Within Expectations But Risks Prevail
Affin’s 1Q25 earnings were in line with expectations, supported by positive JAWs and improved associate contributions, although higher tax rates tempered its bottom-line growth. PBT declined sequentially due to the absence of writebacks. Despite an improving CASA mix, loan growth and NIM risks, rich +1.5SD P/B valuations following strategic shareholder entry suggest an unfavourable reward to risk payoff. Maintain SELL with a target price of RM2.38 (0.4x 2025F P/B, 4.6% ROE).
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| MAYBANK KIM ENG | UOB KAYHIAN |
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Netlink NBN Trust (NETLINK SP) FY25 operating metrics in line, dividend beats consensus
2H25/FY25 review: NPAT misses but on the surface FY25 earnings declined 6% YoY and are 6% below the Street. Revenue and EBITDA also declined 1% YoY and missed Street expectations by 2%. However, we note that higher-margin RAB revenue is stabilizing as rising connections offset the regulatory price cut, which came into effect in Apr’24. Despite earnings drop, the company declared a final dividend of SGD2.68 cents (SGD5.36 for full year), which increased 1% YoY and is 1% ahead of Street expectations. FY25 translates to an attractive 6% dividend yield and remains highly sustainable, in our view.
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Kuala Lumpur Kepong (KLK MK) 2QFY25 Earnings Preview: Results Expected To Be Sequentially Softer
KLK is scheduled to release its 2QFY25 results on 22 May. We expect core earnings to soften qoq despite firm ASPs, given the seasonal drop in upstream production, although downstream contribution may pick up sequentially largely on the cessation of forex hedging losses posted in 1QFY25. Headline earnings are also seen impacted by business restructuring losses arising from associate Synthomer. Maintain HOLD on KLK with an unchanged target price of RM19.00.
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