Keppel DC REIT - CGS-CIMB Research 2022-06-21: Deepens Footprint In China

Keppel DC REIT - Deepens Footprint In China

  • Keppel DC REIT (SGX:AJBU) has entered into agreements with Guangdong Bluesea Data Development Co Ltd (Bluesea) and its parent company Guangdong Bluesea Mobile Development Co Ltd to acquire two data centre (DC) facilities, on a fully fitted basis, in Jiangmen, Guangdong for RMB1,380.6m (~S$297.1m) or at a 0.6% discount to independent valuations. The two DCs will be named Guangdong DC2 and Guangdong DC3, upon completion of the deal.
  • We expect the acquisition to strengthen Keppel DC REIT’s foothold in China, Asia’s largest data centre hub. The properties will be leased to Bluesea on a triple-net basis for 15 years.
  • Management indicated that it intends to fund the acquisitions with a mix of debt, new equity and/or existing cash. The structure and timing of the equity fund raising exercise have not been determined as yet.
  • Based on management’s assumption of a 55/45 debt/equity funding structure, the proforma financial effect of the acquisition would be a 2.7% accretion to DPU and 1.5% uplift to its book NAV.
  • We raise our FY22-24F DPU forecast for Keppel DC REIT by 0.7-3.21% as we factor in the contributions from the new acquisitions and assume a 55/45 debt/equity funding structure. Our DDM-based target price for Keppel DC REIT rises to S$2.63.
  • Following its recent share price decline, Keppel DC REIT is trading at ~5.3% FY22F dividend yield.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | 2022-06-21
SGX Stock Analyst Report ADD MAINTAIN ADD 2.63 UP 2.620

Read also CGS-CIMB's most recent report:
2022-07-26 Keppel DC REIT - DPU Growth Against The Odds

Check out the most recent target prices at Keppel DC REIT Target Prices. Listing of analyst research reports at Keppel DC REIT Analyst Report.

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