SINGAPORE (Nov 20): OCBC is maintaining its “buy” call on Keppel DC REIT (KDCREIT) with a target price of $1.50 as the research house believes that the outlook for the data centre industry remains largely sanguine, especially for the APAC region.
In a Monday report, analyst Andy Wong Teck Ching believes that the REIT is poised to benefit from this trend given its significant exposure to the region.
“We expect demand to remain robust, underpinned by secular growth trends such as cloud computing, e-commerce and big data requirements, and supported by Singapore’s infrastructure and Smart Nation initiatives,” says Wong.
In September, the REIT acquired its second data centre in Dublin, Ireland – B10 Data Centre for EUR66.0 million ($101.3 million).
See: Keppel DC REIT acquires second Dublin data centre for $101.3 mil
Along with the REIT’s maincubes data centre in Germany which is currently under construction, the analyst estimates that KDCREIT’s AUM is now around $1.7 billion, which is on track to meet the management’s $2 billion AUM target by 2018.
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While its current stock price at 1.47 times FY18 book may appear steep, Wong says this compared favourably to other listed data centre REITs and comes in at only a slight premium to Mapletree Industrial Trust's 1.41 times FY18 book, which owns more traditional industrial assets.
As at 11.24am, units in KDCREIT are trading at $1.40 or 18.3 time FY18F earnings with a DPU yield of 5.5%.
