Keppel DC REIT - DBS Research 2022-01-25: Every Byte Counts

Keppel DC REIT - Every Byte Counts

KEPPEL DC REIT (SGX:AJBU) | SGinvestors.ioKEPPEL DC REIT (SGX:AJBU)
  • Despite the divestment of iseek Data Centre in Brisbane, Keppel DC REIT (SGX:AJBU) reported a 1.6% y-o-y increase in FY21 NPI to S$248.2m. The increase was mainly driven by the additional income from AEIs in Dublin and Singapore. In addition, FY21 included full-year income contributions from Kelsterbach DC and Amsterdam DC. To a smaller extent, the acquisitions of Eindhoven DC and Guangdong DC towards the end of FY21 also contributed to the increase in earnings.
  • Keppel DC REIT reported a 7.4% y-o-y increase in DPU mainly due to the AEIs and acquisitions mentioned above.
  • We have maintained our acquisition assumptions of S$300m by the end of FY22 as Keppel DC REIT continues to demonstrate their ability to acquire despite the rapid cap rate compressions globally. However, as seen in its latest acquisition of the London Data Centre at a yield of ~4.5%, we have revised our yield assumptions for future acquisitions.
  • Despite the downward revision in our projections due to the tightening yields of assumed acquisitions and a higher long-term cost of debt, Keppel DC REIT is still expected to generate a DPU CAGR of ~6% over the next two years. At current Keppel DC REIT's share price, this implies a very attractive forward yield of ~4.8% and ~4.9% for FY22 and FY23 respectively.
  • With the ROFR in place for the 5 remaining data centres in Guangdong, as well as Keppel DC REIT’s continued hunt for more accretive acquisitions, there is a potential for Keppel DC REIT to surprise on the upside by delivering larger acquisitions with higher yields.
  • Based on our revised earnings projections and a more conservative WACC, we have revised our target price for Keppel DC REIT down to S$2.80.



Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.



Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-01-25
SGX Stock Analyst Report BUY MAINTAIN BUY 2.80 DOWN 3.000




Read also DBS Research's most recent report:
2022-06-03 Keppel DC REIT - Yields That Are Too Hard To Ignore

Target prices by 3 other brokers at Keppel DC REIT Target Prices.
Listing of broker reports at Keppel DC REIT Analyst Report.

Relevant links:
Keppel DC REIT Share Price History,
Keppel DC REIT Announcements,
Keppel DC REIT Dividends & Corp Actions,
Keppel DC REIT News Articles





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