Keppel REIT (K71U) AI Stock Analysis

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Keppel REIT

(SGX:K71U)

Rating:67Neutral

Price Target:―

Keppel REIT's overall score reflects a stable financial performance with strong margins and a solid balance sheet, but concerns over declining revenue and profitability, as well as negative free cash flow growth, need attention. The technical analysis suggests a bearish trend, with the stock trading below key moving averages. The valuation indicates a high P/E ratio, but the attractive dividend yield offers some appeal to investors. No recent earnings call data or corporate events were factored into this analysis.

Positive Factors

Net Property Income

Broad-based growth in Singapore and overseas contributed to a 10.7% year-over-year growth in Net Property Income in 2H24.

Occupancy and Leasing

KREIT renewed or leased approximately 260,000 square feet of space, with demand coming from several key sectors.

Rental Reversion

Positive rental reversion continues, with a 1Q25 rental reversion at +10.6%.

Negative Factors

Interest Costs

1Q25 distribution income was 3.2% lower year-over-year due to higher interest costs and payment of 25% of management fees in cash.

Market Risks

Key risks to the positive view are a prolonged economic downturn and potential second wave of COVID-19, which could impact rents and vacancies.

Occupancy Levels

Occupancy at Ocean Financial Centre (OFC) dipped 3.7ppt qoq to 94.7% due to BNP Paribas returning several floors.

Keppel REIT (K71U) vs. iShares MSCI Singapore ETF (EWS)

Market Cap

$3.36B

Dividend Yield6.23%

Average Volume (3M)4.73M

Price to Earnings (P/E)33.4

Beta (1Y)0.58

Revenue Growth4.19%

EPS Growth-42.41%

CountrySG

Employees25

SectorReal Estate

Sector Strength60

IndustryREIT - Office

Share Statistics

EPS (TTM)N/A

Shares Outstanding3,880,485,400

10 Day Avg. Volume5,330,214

30 Day Avg. Volume4,729,684

Financial Highlights & Ratios

PEG Ratio-1.12

Price to Book (P/B)0.81

Price to Sales (P/S)0.00

P/FCF Ratio17.76

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$1.08

Price Target Upside24.29% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Keppel REIT Business Overview & Revenue Model

Company DescriptionKeppel REIT (K71U) is a Singapore-based real estate investment trust focusing primarily on premium commercial properties in key business districts across Asia. It is managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte. Ltd. The REIT's portfolio includes high-quality office assets located in strategic locations within Singapore, Australia, and South Korea, offering tenants a desirable working environment with excellent connectivity and amenities.

How the Company Makes MoneyKeppel REIT generates revenue primarily through rental income derived from its portfolio of office properties. It leases space to a diverse tenant base, including multinational corporations and financial institutions, ensuring stable and recurring rental income. Additionally, Keppel REIT may engage in strategic property acquisitions and disposals to enhance its portfolio value and generate capital gains. The REIT also benefits from its partnership with Keppel Land and other affiliates, leveraging their expertise in property development and management to optimize asset performance and value. Furthermore, Keppel REIT might engage in financial instruments and hedging strategies to manage interest rate exposure and enhance returns.

Keppel REIT Earnings Call Summary

Earnings Call Date:Apr 16, 2025

(Q2-2024)

% Change Since: 8.07%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with significant growth in property income and high occupancy rates being notable positives. However, these were offset by concerns over decreased distributable income, increased borrowing costs, and currency impacts affecting joint ventures. The sentiment reflects a cautious outlook with both achievements and challenges ahead.

Q2-2024 Updates

Positive Updates

Increase in Property Income and Net Profit

Property income grew 9% year-on-year to $125 million, and net profit income grew 7.7% year-on-year to $96.8 million.

High Portfolio Occupancy

Portfolio committed occupancy increased to 97% from 96.4% in the previous quarter.

Successful Leasing Activities

546,000 square feet of space committed with a portfolio rental reversion of 9.3%.

Increased Portfolio Valuation

Overall portfolio valuation increased by 3.3% in Singapore dollar terms.

Sustainability Initiatives

Various activities were organized to promote sustainability, including a significant upcycling initiative.

Negative Updates

Decrease in Distributable Income and DPU

Distributable income and DPU for the first half of 2024 decreased 1.9% and 3.4% year-on-year to $106.9 million and $0.028, respectively.

Higher Borrowing Costs

Borrowing costs increased 29.8% year-on-year due to the high interest rate environment.

Currency Impact on Joint Ventures

Decrease in share of results of joint ventures due to a weaker Australian dollar against the Singapore dollar.

Asset Valuation Concerns in Australia

Excluding 255 George Street, the valuation of the Australia portfolio decreased by 4.4% due to softer cap rates.

Company Guidance

During the Q2 2024 earnings call for Keppel REIT, several key metrics were highlighted. Property income rose by 9% year-on-year to $125 million, while net property income increased by 7.7% to $96.8 million. Despite these gains, the distribution per unit (DPU) decreased to $0.028 due to higher borrowing costs. The financial position remained strong with an aggregate leverage of 41.3% and an all-in interest rate of 3.31% per annum for the first half of 2024. Rental reversion was recorded at 9.3%, and portfolio committed occupancy improved to 97%. The portfolio's weighted average lease expiry (WALE) was stable at 4.6 years, and the top 10 tenants had a WALE of 8.3 years. Keppel REIT's portfolio valuation stood at SGD 9.6 billion, with Singapore accounting for 77% of this value. Additionally, borrowing costs increased by 29.8% year-on-year, reflecting the high-interest-rate environment. The call also mentioned efforts to maintain a high occupancy rate across properties and the potential for asset recycling to manage leverage levels.

Keppel REIT Financial Statement Overview

Summary

Overall, Keppel REIT shows a stable financial position with strong gross and EBITDA margins and a solid balance sheet. However, the decline in revenue and net profit margins, along with negative free cash flow growth, highlight potential areas of concern. The company must focus on reversing revenue declines and maintaining profitability to ensure continued financial health.

Income Statement

Positive

The income statement reveals a mixed performance. The gross profit margin and EBITDA margin are strong, indicating efficient cost management. However, the net profit margin has declined from the previous year, signaling possible challenges in profitability. The revenue growth rate is negative, showing a decrease in total revenue year-over-year, which could be concerning for future profitability.

Balance Sheet

Positive

The balance sheet is relatively strong, with a solid equity base and a reasonable debt-to-equity ratio, suggesting financial stability. The equity ratio is high, indicating a strong capital structure. However, there has been an increase in total liabilities compared to previous years, which could pose a risk if it continues to rise.

Cash Flow

Positive

The cash flow statement is stable, with a positive operating cash flow to net income ratio, indicating good cash generation relative to net income. However, the free cash flow growth rate is negative, reflecting decreased cash flow from operations and capital expenditures. This could impact the company’s ability to finance new investments or return capital to shareholders.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
282.89M	336.86M	219.29M	216.61M	170.22M
	Gross Profit
158.18M	286.17M	175.94M	172.53M	135.48M
	EBIT
0.00	223.79M	496.90M	330.91M	44.74M
	EBITDA
217.70M	273.04M	496.93M	330.93M	44.75M
	Net Income Common Stockholders
108.44M	178.03M	414.84M	241.17M	279.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
83.87M	141.58M	174.96M	178.68M	146.02M
	Total Assets
8.46B	8.26B	8.88B	8.49B	7.76B
	Total Debt
2.66B	2.34B	2.85B	2.73B	2.38B
	Net Debt
2.58B	2.21B	2.68B	2.55B	2.23B
	Total Liabilities
2.82B	2.51B	3.02B	2.90B	2.54B
	Stockholders Equity
5.19B	5.00B	5.42B	5.17B	4.80B
Cash Flow		Free Cash Flow
188.98M	200.51M	162.22M	108.55M	93.73M
	Operating Cash Flow
188.99M	208.06M	162.23M	113.67M	104.46M
	Investing Cash Flow
-250.92M	492.82M	-46.38M	-383.13M	-219.88M
	Financing Cash Flow
2.15M	-742.27M	-111.42M	303.35M	140.88M

Keppel REIT Technical Analysis

Technical Analysis Sentiment

Positive

Last Price0.87

Price Trends

50DMA

0.85

Positive

100DMA

0.84

Positive

200DMA

0.85

Positive

Market Momentum

MACD

<0.01

Negative

RSI

64.41

Neutral

STOCH

68.33

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:K71U, the sentiment is Positive. The current price of 0.87 is above the 20-day moving average (MA) of 0.86, above the 50-day MA of 0.85, and above the 200-day MA of 0.85, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 64.41 is Neutral, neither overbought nor oversold. The STOCH value of 68.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SG:K71U.

Keppel REIT Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
C38U	73 Outperform	$15.44B	15.51	6.32%	4.82%	1.54%	4.48%
K71U	67 Neutral	$3.36B	33.40	2.02%	6.23%	4.19%	-42.41%
T82U	66 Neutral	$3.32B	29.20	1.86%	5.31%	-1.16%	-34.74%
M1GU	65 Neutral	$410.65M	36.14	1.98%	9.19%	1.28%	-37.80%
Sector *	61 Neutral	$2.83B	10.98	0.41%	8438.90%	5.81%	-21.06%
M44U	59 Neutral	$5.63B	30.41	2.74%	6.43%	-0.97%	-40.20%
BUOU	58 Neutral	$3.05B	22.69	3.21%	6.03%	11.98%	―

* Real Estate Sector Average

Performance Comparison

SG:K71U

Keppel REIT

0.87

0.07

9.43%

SG:M1GU

Sabana Shari'ah Compliant Industrial REIT

0.41

0.09

27.33%

SG:C38U

CapitaLand Mall

2.10

0.24

12.72%

SG:M44U

Mapletree Logistics

1.11

-0.13

-10.27%

SG:BUOU

Frasers Logistics & Commercial Trust

0.81

-0.09

-9.90%

SG:T82U

Suntec Real Estate Investment

1.13

0.12

11.44%

Keppel REIT Corporate Events

Keppel REIT Issues Units for Management Fee Payment

Apr 30, 2025

Keppel REIT Management Limited has announced the issuance of 9,890,735 units at S$0.8572 per unit as part of the management fee payment for the period from January to March 2025. This issuance increases the company’s holdings to 196,484,713 units, representing 5.06% of the total issued units in Keppel REIT, reflecting the company’s strategic decision to receive a portion of its fees in units to strengthen its position in the trust.

Keppel REIT Secures S$150 Million Green Loan Facility

Apr 29, 2025

Keppel REIT has secured a S$150 million Green Loan Facility, guaranteed by HSBC Institutional Trust Services, to support its operations. A condition of the loan requires immediate repayment if there is a change in management not involving a wholly-owned subsidiary of Keppel Ltd., potentially impacting facilities worth approximately S$2.671 billion if triggered.

Keppel REIT Releases Q1 2025 Business Updates

Apr 23, 2025

Keppel REIT, managed by Keppel REIT Management Limited, has released its key business and operational updates for the first quarter of 2025. The announcement provides insights into the company’s performance and strategic direction, which are crucial for stakeholders to understand its market positioning and future prospects.

Keppel REIT Increases Stake with Management Fee Units Issuance

Feb 7, 2025

Keppel REIT Management Limited announced the issuance of 26,548,914 units at S$0.8507 per unit as payment for its management fees, thereby increasing its holdings to approximately 4.83% of the total issued units. This strategic move aligns with Keppel REIT’s trust deed, allowing the company to receive its management fees entirely in units, reinforcing its commitment to stakeholder value and its positioning in the REIT market.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.