SingTel shares to rocket on NetLink Trust IPO?

When Kimly Group, a local coffee shop chain, was listed in Catalist a couple of months ago, it generated much interests among investors and local finance bloggers. With a market capitalization of only $288 million, Kimly Group does not fall in the league of the big boy category nor the blockbuster type of listing that SGX mainboard should be gunning. In this regard, all eyes must be on the mouth-watering NetLink Trust IPO.

To put things into perspective, if SGX’s strategy was to sell itself as “Asian Gateway”, then it must seriously start to attract billion dollar listings. Aircraft lessor, BOC Aviation, which is based in Singapore and used to be owned by Singapore Airlines, has previously given SGX the snub. The lessor chose to list in Hong Kong instead. It was a massive blow for SGX as the company is estimated to be worth a whopping $6 billion.

Then again, with a slew of privatisations taking place, SGX management has more pressing issues to settle than attracting billion dollar listings. Among the many delisted companies, homegrown OSIM applies for listing in Hong Kong as V3 just months after exit from Singapore stock market. This shock move should be a wake-up call for SGX and something drastic should be done to stem the decline.

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NetLink Trust will certainly fit the profile of listing that SGX should be aiming for. NetLink Trust is an associate of SingTel which announced in February that it is hiring three banks to advise on the impending NetLink Trust IPO. The move is due to the April 2018 deadline set by Singapore authority which requires SingTel to divest its stake in NetLink to below 25 percent. During the briefing, CEO Ms Chua Sock Koong did not reveal the size of the proposed offering. However, analysts estimated the value of NetLink Trust to be around $4.5 billion.

Previously, I have written several blog posts to analyse SingTel. Would strongly encourage readers to take a look:

  1. SingTel’s investment moats
  2. Is it worth investing in SingTel now?
  3. Investing in SingTel

NetLink Trust designs, builds, owns and operates the fibre network infrastructure which is the foundation of Singapore’s Next Generation Nationwide Broadband Network (Next Gen NBN). The company is deemed fast growing as it contributed $32 million post tax profits to SingTel in the last quarter financial results, an increase of 42% compared to last year.

Although currently 100% owned by Singtel, NetLink Trust is

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Updated: March 13, 2019 — 9:17 am

5 Comments

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  1. Try to get the idea: how can a company with $32m PBT be valued at 4.5b, when broadband penetration is 70+%, even though assuming 42% yoy growth?

  2. S$32 million post tax profits to SingTel in the last quarter financial results,(42% increase), i.e. S$128 mil. profit extrapolation in 12 months. Using P/E of 30, should be around S$4.0 bil.

  3. Hi Bruce,

    Financial performance and balance sheet are two different things.
    No hard feeling but I think you should learn how to analyse financial reports first before you invest.
    When you invest in a company, you don’t just look at the profit and loss statement. You also need to assess the cash flow and balance sheet to determine the health and then derive the value of stock.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  4. What do you think of the NetLink Trust IPO recently announced?

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