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Keppel DC REIT AJBU

Morningstar Rating
SGD 1.80 −0.03 (1.64%)
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Company Report

Keppel DC REIT: Guangdong Data Centers Will Continue to Drag on Trust’s Performance

Keppel DC REIT’s first-quarter 2024 revenue and net property income were ahead of our expectations due to the recognition of SGD 13.3 million from the settlement of the dispute between the trust and its tenant DXC Technology. After deducting related expenses, management estimates that SGD 11.2 million will be distributed to unitholders in 2024. The trust is working with DXC to take back the disputed area and is hopeful it will get new tenants with positive rental reversions. After updating our model to incorporate this one-off settlement sum, we raise our 2024 distribution-per-unit estimate by 6.5% to SGD 0.0899, implying a yield of 5.5% at the current price. However, we keep our fair value estimate of SGD 1.80 per unit unchanged as longer-term earnings forecasts remain intact. We continue to see the trust as fairly valued. In our view, the lack of visibility on the full recovery of its Guangdong data centers will continue to weigh on its unit price performance and hence, encourage investors to wait for a wider margin of safety.

Price vs Fair Value

AJBU is trading at a 29% premium.
Price
SGD 1.83
Fair Value
SGD 7.90
Uncertainty
Medium
1-Star Price
SGD 9.75
5-Star Price
SGD 8.39
Economic Moat
Fkckhmz
Capital Allocation
Kppttrp

Bulls Say, Bears Say

Bulls

KDC REIT has a strong and reputable sponsor with a healthy pipeline of data center assets for acquisition.

Bears

With around 80% of its rental income contributed by its top 10 tenants, KDC REIT is exposed to high tenant concentration risk.

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Trading Information

Previous Close Price
SGD 1.83
Day Range
SGD 1.791.83
52-Week Range
SGD 1.602.30
Bid/Ask
SGD 1.80 / SGD 1.81
Market Cap
SGD 3.10 Bil
Volume/Avg
4.7 Mil / 4.5 Mil

Key Statistics

Price/Earnings (Normalized)
20.89
Price/Sales
11.20
Dividend Yield (Trailing)
5.21%
Dividend Yield (Forward)
5.21%
Total Yield
5.13%

Company Profile

Keppel DC REIT is a real estate investment trust that principally invests in real estate assets used primarily for data center purposes and assets necessary to support the digital economy. As at Dec. 31, 2023, it held a SGD 3.7 billion portfolio of 23 properties across nine countries in Asia and Europe. Its properties are leased out as colocation, fully fitted and shell and core data centers. The trust is externally managed by Keppel DC REIT Management Pte. Ltd., and parent company Keppel Corporation Limited owns around a 20% stake in the trust.
Sector
Real Estate
Industry
REIT - Office
Stock Style Box
Mid Value
Total Number of Employees
14

Competitors

Valuation

Metric
AJBU
EQIX
ME8U
Price/Earnings (Normalized)
20.8975.1617.08
Price/Book Value
1.365.921.19
Price/Sales
11.208.729.50
Price/Cash Flow
17.7221.7418.58
Price/Earnings
AJBU
EQIX
ME8U

Financial Strength

Metric
AJBU
EQIX
ME8U
Quick Ratio
1.390.901.18
Current Ratio
1.411.101.20
Interest Coverage
2.953.423.46
Quick Ratio
AJBU
EQIX
ME8U

Profitability

Metric
AJBU
EQIX
ME8U
Return on Assets (Normalized)
2.76%4.09%3.12%
Return on Equity (Normalized)
4.72%10.73%5.31%
Return on Invested Capital (Normalized)
4.12%5.34%4.52%
Return on Assets
AJBU
EQIX
ME8U
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