in Blog, Reits, Stocks, 1 comments

Keppel DC REIT – Yields that are too hard to ignore

by Augustine // June 21, 2022  

”

Looking for a trusted Stock Remisier?
Augustine works closely with a small group of clients - providing regular market updates, Bazi & astrology wealth insights, and clear guidance to invest with confidence.

📩 Check out my profile here today!

Excerpts from DBS Group research report

KEPPEL DC REIT (SGX: AJBU)

Keppel DC Reit recent acquisitions to drive organic growth

The recent completion of the Guangdong Data Centre and London Data Centre has reignited optimism for Keppel DC Reit (KDCREIT)’s growth trajectory. With data centres becoming increasingly expensive, KDCREIT has these recent acquisitions to rely on to drive organic growth in the near term while it continues to hunt for the next accretive acquisition.

Near-term challenges, but fundamentals still positive

Higher utility costs and rising interest rates will pose as near-term risks to KDCREIT’s earnings. Although accretion from recent acquisitions have been eroded by higher operating costs, we believe the bulk of these impacts have already been felt and factored into current share price. Going forward, growing demand for data centres and positive fundamentals in the sector will help KDCREIT return to its organic growth path.

Market dynamics supportive of further growth

KDCREIT's current portfolio occupancy of more than 98% is the highest since its IPO in 2014. The continued strong demand for data centre capacity amid the prolonged COVID-19 outbreak and rise of the digital economy would support higher occupancies and revenues across its portfolio in the foreseeable future.

Valuation/Valuation

Our target price of S$2.40 is based on DCF, assuming a WACC of 5.8% (risk-free rate of 3.0%). We have pencilled in S$100m of acquisitions by the end of FY22. We have assumed deals worth a total of S$100m in our estimates at a conservative yield of only 4.5%. Assuming no acquisitions, our TP will be S$2.35.

Keppel DC Reit key risks

Competition from larger third-party data centre players. KDCREIT may face higher barriers to entry and stiffer competition from international operators/funds that are also looking to grow their footprint and attract tenants. KDC share price chart You can find the full report here and the website here  
 Previous
Next

About the author Augustine

Be A Valued Client of Augustine in Lim&Tan Securities
Receive Augustine’s regular stock updates via Telegram plus full access to his private client hub with exclusive research, astrology and Bazi insights.
(Exclusive Readings for Clients Only)

Leave a Comment

Check Out Our Latest Articles

DBS Group – A Bazi Analysis

Many investors would have known about DBS Group Investors would have make decent gains as the share price has been rising for the past few years. In fact, investors would have gain a total return of 131.93% excluding dividends received if he purchased the share 5 years ago! Many investors would already know about the

Read More

Apple Stock Analysis: Using Fundamentals and Bazi

This is an in depth analysis on Apple stock both using Fundamental and Bazi analysis. Apple remains a cash-generative, platform-centric technology leader with a resilient earnings mix. In fiscal Q4 2025 Apple posted revenue of $102.5 billion and non-GAAP EPS of $1.85, driven by a strong iPhone cycle and record Services revenue. That result reinforced

Read More

3 SGX High Yield Small Cap Dividend Stocks to Watch

Looking for SGX high yield small cap dividend stocks that offer strong passive income potential without relying only on large-cap blue chips or REITs? In Singapore, most dividend investors immediately turn to banks, REITs or government-linked companies for stability, but there are smaller gems that may offer attractive yields while still operating solid business models.

Read More