Keppel DC REIT, the Real Estate sector company, was revisited by a Wall Street analyst yesterday. Analyst Darren Chan from Phillip Securities maintained a Hold rating on the stock and has a S$2.40 price target.
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Darren Chan has given his Hold rating due to a combination of factors influencing Keppel DC REIT’s current performance and future prospects. The REIT’s distribution per unit (DPU) has shown growth, driven by recent acquisitions and favorable contract renewals, yet the impact of a recent preferential offering has slightly diluted the DPU. Despite stable portfolio occupancy and strong rental reversions, the unresolved issue of overdue rent from Bluesea remains a concern, potentially affecting future income.
Furthermore, while finance costs have decreased and are expected to continue declining, the anticipated increase in leverage due to the acquisition of Tokyo DC 3 adds a layer of risk. The stock’s current trading yield and the unresolved situation with the Guangdong data centers contribute to a cautious outlook. These factors, combined with the expectation of high single-digit rental reversions and no major lease renewals in the near term, support the decision to maintain a Hold rating.
Chan covers the Real Estate sector, focusing on stocks such as City Developments, CapitaLand Investment Limited, and Prime US REIT. According to TipRanks, Chan has an average return of 8.7% and a 69.64% success rate on recommended stocks.