Digital Core REIT (DCRU) AI Stock Analysis

• Market Cap: $619.40M
• Dividend Yield: 6.94%
• Average Volume (3M): 4.17M
• Price to Earnings (P/E): 3.2
• Beta (1Y): 0.76
• Revenue Growth: 36.48%
• EPS Growth: N/A
• Country: SG
• Employees: 3,000
• Sector: Real Estate
• Sector Strength: 53
• Industry: REIT - Specialty
• EPS (TTM): <0.01
• Shares Outstanding: 1,304,009,900
• 10 Day Avg. Volume: 3,617,600
• 30 Day Avg. Volume: 4,166,112
• PEG Ratio: -0.01
• Price to Book (P/B): 0.72
• Price to Sales (P/S): 7.37
• P/FCF Ratio: 13.46
• Enterprise Value/Market Cap: 2.73
• Enterprise Value/Revenue: 12.88
• Enterprise Value/Gross Profit: 29.16
• Enterprise Value/Ebitda: 88.02
• 1Y Price Target: $0.69
• Price Target Upside: 32.69% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 71 Outperform
• Price Target: $0.50 ▼(-3.85% Downside)

Digital Core REIT's overall score is driven by strong valuation metrics, with a low P/E ratio and high dividend yield making it attractive for investors. Financial performance is mixed, with improved profitability and cash flow offsetting revenue decline. Technical analysis indicates positive trends but warns of potential overbought conditions.

Positive Factors

Cash Generation

Strong cash generation capabilities indicate efficient operations and provide flexibility for future investments and debt management.

Data Center Demand

Growing demand for data centers driven by AI trends supports long-term revenue growth and market positioning for Digital Core REIT.

Balance Sheet Health

A stable balance sheet with manageable leverage enhances financial stability and supports sustainable growth strategies.

Negative Factors

Revenue Decline

Significant revenue decline could impact long-term growth prospects and indicates potential challenges in maintaining market share.

Supply Chain Constraints

Supply chain issues may hinder expansion and operational efficiency, affecting the company's ability to capitalize on growing demand.

Unit Issuance for Fees

Issuing units for fees may dilute existing unitholders and reflect challenges in cash management, impacting investor returns.

Digital Core REIT Business Overview & Revenue Model

Company Description

Digital Core REIT, a real estate investment trust, engages in the development, acquisition, ownership, and operation of data centres. It has 10 mission-critical data centres located in the United States and Canada. The company was incorporated in 2021 and is based in Singapore.

How the Company Makes Money

Digital Core REIT generates revenue primarily through leasing its data center properties to various tenants under long-term lease agreements. The rental income from these leases constitutes the bulk of the company's revenue. The company also benefits from potential escalations in rent as lease agreements typically include provisions for periodic rent increases. Additionally, DCRU may engage in strategic partnerships with technology firms and service providers to enhance its offerings, which could lead to joint ventures or revenue-sharing agreements. The growing demand for data storage and processing, driven by trends such as cloud computing and digital transformation, further supports the company's revenue growth potential.

Digital Core REIT Financial Statement Overview

Summary

Digital Core REIT shows mixed financial performance. Despite a revenue decline of 21.38%, profitability and cash flow metrics have improved, indicating better operational efficiency and cash management. The balance sheet is stable with manageable leverage.

Income Statement

Digital Core REIT's income statement shows mixed performance. The company has experienced a significant revenue decline of 21.38% in the latest year, which is concerning. However, profitability metrics such as the EBIT margin and net profit margin have improved significantly, indicating better cost management and operational efficiency. The gross profit margin remains strong, although slightly decreased from previous years.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.63, indicating a balanced approach to leveraging. The return on equity has improved significantly, suggesting enhanced profitability relative to shareholder equity. The equity ratio is stable, showing a solid equity base relative to total assets. Overall, the balance sheet indicates a stable financial position with manageable leverage.

Cash Flow

Cash flow analysis reveals a robust free cash flow growth rate of 125.80%, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is healthy, indicating efficient conversion of income into cash. The free cash flow to net income ratio is at 1.0, suggesting that all net income is effectively translated into free cash flow, which is a positive indicator of cash flow health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2020	Dec 2019
Income Statement
Total Revenue	131.23M	102.27M	108.70M	116.49M	76.62M	78.75M
Gross Profit	57.95M	55.37M	61.72M	76.47M	31.88M	44.11M
EBITDA	19.20M	327.21M	-101.67M	29.91M	53.22M	42.22M
Net Income	208.43M	205.38M	-108.58M	1.54M	29.54M	18.40M
Balance Sheet
Total Assets	2.22B	2.01B	1.51B	1.61B	1.45B	0.00
Cash, Cash Equivalents and Short-Term Investments	60.72M	44.12M	12.10M	26.66M	4.00M	0.00
Total Debt	797.26M	653.84M	555.49M	495.03M	348.07M	0.00
Total Liabilities	907.14M	735.29M	589.41M	535.54M	355.58M	0.00
Stockholders Equity	1.06B	1.04B	790.48M	934.89M	949.51M	0.00
Cash Flow
Free Cash Flow	0.00	56.03M	40.93M	76.22M	41.40M	0.00
Operating Cash Flow	0.00	56.03M	40.93M	76.22M	54.75M	0.00
Investing Cash Flow	0.00	-45.67M	-50.91M	-1.45B	-936.33M	0.00
Financing Cash Flow	0.00	20.09M	-3.59M	1.41B	909.81M	0.00

Digital Core REIT Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 0.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:DCRU, the sentiment is Positive. The current price of 0.52 is above the 20-day moving average (MA) of 0.49, above the 50-day MA of 0.50, and above the 200-day MA of 0.50, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 60.93 is Neutral, neither overbought nor oversold. The STOCH value of 64.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SG:DCRU.

Digital Core REIT Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCRU	―	$619.40M	3.16	20.33%	6.94%	36.48%	―
Sector *	―	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
UD1U	―	S$390.00M	29.59	1.69%	8.52%	-11.29%	―
ODBU	―	$299.70M	10.33	6.49%	8.49%	-1.34%	-6.08%
OXMU	―	$286.05M	94.76	0.38%	1.79%	-12.01%	―
XZL	―	$153.73M	―	-5.62%	―	-6.01%	-36.46%
CMOU	―	$235.00M	-15.10	-2.12%	―	-1.55%	78.22%

Digital Core REIT Corporate Events

Digital Core REIT Highlights Robust Data Center Demand Amid AI Growth

Digital Core REIT reports that the data center industry is experiencing tightened fundamentals due to the explosive growth of artificial intelligence workloads, leading to robust demand. The constraints in the supply chain, such as longer equipment lead-times and scarcity of skilled labor, along with limited power availability, are keeping vacancy rates low and supporting market pricing. This situation presents a compelling opportunity for investors, given the sector’s inelastic demand profile and attractive valuations.

Digital Core REIT Issues Qualified Notice on Tax Withholding Exemption

Digital Core REIT has issued a Qualified Notice indicating that transfers of interests in the REIT are exempt from certain withholding requirements under U.S. tax regulations. This announcement clarifies that the REIT was not engaged in any trade or business within the United States during the relevant taxable year, which may impact investors by simplifying the tax implications of trading its interests.

Digital Core REIT Issues Units for Management Fee Payment

Digital Core REIT has announced the issuance of 5,466,196 units at a price of US$0.5800 per unit as payment for its management fee for the second half of 2023. This move, as per the company’s trust deed, allows the management fee to be paid in units, increasing the company’s total unitholding to 24,610,396 units, which is approximately 1.887% of the total issued units. The issuance reflects the company’s strategic approach to managing its financial obligations and maintaining its stake within the REIT.