Keppel DC REIT (KPDCF – Research Report), the Real Estate sector company, was revisited by a Wall Street analyst today. Analyst Darren Chan from Phillip Securities maintained a Buy rating on the stock and has a S$1.86 price target.
Darren Chan has given his Buy rating due to a combination of factors influencing Keppel DC REIT’s potential for growth and resilience. Notably, the settlement with DXC has provided a significant financial uplift, with a sum of S$13.3 million received, mitigating the impact of lost rental income from the Guangdong data centers. This settlement will be distributed across FY24, offering some relief from the non-collection of rent. Furthermore, Chan points to the REIT’s organic growth prospects, underlined by a forecast of approximately 4% rental reversions for the fiscal year 2024, and a robust occupancy rate that remained high and unchanged from the previous quarter.
Additionally, Chan’s confidence is bolstered by the REIT’s prudent capital management strategies. Keppel DC REIT has demonstrated a healthy interest coverage ratio and a slight decrease in the average cost of debt. A significant portion of the REIT’s debt is fixed-rate, mitigating interest rate volatility, and its gearing remains comfortably below its internal cap, providing financial flexibility. The report also acknowledges the potential for accretive acquisitions and the collection of past-due rents as additional catalysts that could drive the REIT’s performance. Chan’s target price is maintained, reflecting these positive elements against the backdrop of a stable yield forecast for the upcoming fiscal years.
According to TipRanks, Chan is an analyst with an average return of -6.6% and a 30.43% success rate. Chan covers the Real Estate sector, focusing on stocks such as City Developments, Frasers Centrepoint, and Keppel DC REIT.
In another report released today, UOB Kay Hian also maintained a Buy rating on the stock with a S$2.15 price target.
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Keppel DC REIT (KPDCF) Company Description:
Keppel DC REIT is a pure-play data-center REIT company. The company’s strategy is to invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets. Most of its operations take place in Asia-Pacific and in Europe. The fund is managed by Keppel DC REIT Management. The fund’s largest source of revenue is gross rental income. The fund’s data-center properties include Keppel DC Singapore 1, Keppel DC Singapore 2, and a 90% interest in Keppel DC Singapore 3, among others. In Europe, the fund notably owns GV7 Data Center in London, Keppel DC Dublin 1, and Almere Data Center in Almere, the Netherlands.
