Keppel DC REIT: Strong Financial Performance and Strategic Growth Drive Buy Rating

Analyst Jonathan Koh from UOB Kay Hian maintained a Buy rating on Keppel DC REIT (KPDCF – Research Report) and keeping the price target at S$2.55.

Jonathan Koh has given his Buy rating due to a combination of factors that highlight Keppel DC REIT’s strong financial performance and strategic growth initiatives. The REIT reported a significant increase in its distribution per unit (DPU) by 14.2% year-on-year for the first quarter of 2025, which aligns with expectations and demonstrates robust income growth. This growth is primarily driven by contributions from newly acquired data centers in Singapore and Japan, as well as positive rental reversions in colocation leases.
Moreover, Keppel DC REIT’s financial stability is underscored by its resilient balance sheet, with a decrease in aggregate leverage and a stable average cost of debt. The REIT’s strategic focus on expanding its data center capabilities, including potential enhancements to existing facilities, further supports its long-term growth prospects. Additionally, the management’s proactive approach in setting aside funds for future capital expenditures ensures continued operational efficiency and capacity for growth, reinforcing the Buy recommendation.

In another report released today, Phillip Securities also upgraded the stock to a Buy with a S$2.25 price target.