Analyst Lock Mun Yee from CGS-CIMB reiterated a Hold rating on Keppel DC REIT (KPDCF – Research Report) and keeping the price target at S$1.88.
Lock Mun Yee has given his Hold rating due to a combination of factors affecting Keppel DC REIT’s stock. The divestment of the Intellicentre Campus at a premium and subsequent investment in the AU DC note has allowed the company to realize revaluation gains while maintaining a similar income stream. This transaction is seen as accretive to the FY23 distribution per unit (DPU) by 0.7%, with an improvement in gearing levels from 37.4% to 36.6%. The debt headroom post-transaction is approximately S$170 million, underpinning a stable financial position.
However, despite the positive impact on financial metrics, the analyst has reiterated a Hold rating due to a lack of significant growth catalysts and the ongoing uncertainty regarding the Bluesea resolution. The forecast for FY24 to FY26 shows a moderate increase in DPU, which suggests that while operational performance is steady, there isn’t a compelling case for an upgrade in the recommendation. The market consensus already reflects this sentiment, with a mix of Buy, Hold, and Sell ratings, indicating a cautious outlook on the stock’s potential for capital appreciation or significant dividend growth in the near term.
According to TipRanks, Mun Yee is an analyst with an average return of -6.3% and a 23.29% success rate. Mun Yee covers the Real Estate sector, focusing on stocks such as Keppel DC REIT, CapitaLand Ascendas REIT, and Ascott Residence.
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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.
