- Keppel DC REIT (SGX:AJBU)'s 1H24 DPU of 4.549 Singapore cents (-9.9% y-o-y) slightly exceeded our expectations, reaching 53% of our FY24e forecast. This was due to stronger-than-expected positive portfolio rental reversions, with a major contract renewal in Singapore securing over 40% positive reversion.
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- S$11.2mil from the settlement with DXC will be distributed in two equal tranches on a half-yearly basis for FY24. This will partially offset the loss from the non-collection of income at the Guangdong DCs.
- Maintain ACCUMULATE on Keppel DC REIT with a higher DDM-derived Keppel DC REIT target price of S$1.93 from S$1.86. We raise our FY24e/25e DPU estimates 5%/2% after factoring in the Japan acquisition and higher positive rental reversions for the portfolio.
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- The current Keppel DC REIT share price implies FY24e/25e DPU yields of 4.7%/5.1%.
The Positives
Maintained high portfolio occupancy of 97.5% (1Q24: 98.3%) with a portfolio WALE of 6.4 years.
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