Keppel DC REIT, the Real Estate sector company, was revisited by a Wall Street analyst today. Analyst Jonathan Koh from UOB Kay Hian maintained a Buy rating on the stock and has a S$2.69 price target.
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Jonathan Koh’s rating is based on Keppel DC REIT’s strategic pivot towards hyperscale data centres, which is expected to enhance long-term growth. The company has acquired significant assets in Singapore and Japan, focusing on developing relationships with hyperscale tenants that already contribute a substantial portion of its rental income. This strategic move is anticipated to result in positive rental reversions, particularly in Singapore, where colocation lease rates are expected to rise significantly.
Furthermore, Keppel DC REIT is poised to benefit from its association with the Keppel Group and its strategic framework agreement with Amazon Web Services, which could enhance connectivity and energy sector opportunities. The REIT is also actively seeking new acquisitions in key markets like Japan, South Korea, and Europe, aiming to capitalize on emerging trends such as generative AI. The full-year contributions from recent acquisitions in Singapore are expected to provide a boost to rental income, with additional potential from unutilized spaces being converted into data halls.
Koh covers the Real Estate sector, focusing on stocks such as CapitaLand Mall, Keppel DC REIT, and Elite Commercial REIT. According to TipRanks, Koh has an average return of 3.7% and a 57.66% success rate on recommended stocks.
In another report released on June 29, Goldman Sachs also maintained a Buy rating on the stock with a S$2.57 price target.