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UOB KAYHIAN |
UOB KAYHIAN |
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REITs – Singapore Data Centre REITs – Deep Dive Into DeepSeek
DeepSeek showcased the rapid pace of innovation in AI. Both US and Chinese AI players could utilise the techniques exploited by DeepSeek to reduce the cost to train new AI models, which could spur pervasive adoption of AI. Demand for data centres for AI training and AI inference would continue to rise. BUY KDCREIT (Target: S$2.53) as SGP7 and SGP8 start contributing in 1Q25. BUY DCREIT (Target: US$0.93) and MINT (Target: S$2.89) for exposure to the US market.
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Keppel REIT (KREIT SP) 2H24: Inorganic Growth From Australia
KREIT saw increased contributions from newly-completed 2 Blue Street in North Sydney and newly-acquired 255 George Street in Sydney CBD, which were offset by higher cost of debt. New CEO Chua Hsien Yang took over on 1 Jan 25. Management has changed its policy to pay 75% of management fees through new units from 2025. KREIT provides a 2025 distribution yield of 6.6% (CICT: 5.5%, Suntec: 5.2%) and P/NAV is at 0.69x. Maintain BUY. Target price: S$1.06.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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CapitaLand Ascott Trust (CLAS SP) Growing core distribution
Acquisitions and operation drive gross profit growth CLAS reported 2H DPU of SGD3.55c, -6.6% YoY. Core DPU (ex. FX gains) grew 2.7% YoY. FY24 DPU SGD6.1c, -7.3% YoY. Top-line growth was offset by higher borrowing costs and smaller FX gains. Mid-single digit RevPAR growth enabled similar growth in revenue and gross profit on same-store basis. Financial metrics are stable. We factor in mgmt. guidance, tweak down estimates and trim our DDM-based TP to SGD1.10 from SGD1.15. Maintain BUY on back of stable core dividend, diversified portfolio and attractive valuation (6.8% yield, 0.7PB).
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CDL Hospitality Trusts (CDREIT SP) Look beyond the soft patch
Acquisitions, rate cuts to steady distribution CDLHT reported 2H DPU of SGD2.81c, -11.9% YoY. Normalisation of RevPAR, higher operating and borrowing expenses, and stabilisation of newly developed assets in the UK impacted distribution. Financial metrics were relatively stable. Investor meeting with management suggests inorganic growth from recent M&A and development projects, and potential rate cuts should support bottom line in FY25. Medium-term growth will be led by visitor arrivals. Factoring in M&As, we maintain BUY and TP of SGD1.10.
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| MAYBANK KIM ENG | OCBC |
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Keppel REIT (KREIT SP) Impacted by financing costs
Robust operations, elevated gearing unchanged KREIT reported 2H DPU of SGD2.8c, flat HoH/-3.4% YoY. Acquisition-led top-line growth was offset by higher borrowing cost. Portfolio achieved high and stable committed occupancy and mid-teens positive reversion. Gearing was stable; cost of debt rose and coverage fell. Portfolio value inched down due to expanding cap rates in Australia and adverse forex. We cut our estimates for FY26 and lower our DDM-based TP to SGD1.00 from SGD1.05. Maintain BUY.
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CapitaLand India Trust (CLINT) – SummaryRating: BUY (as of 28 Jan 2025)
Key Highlights:
Investment Thesis:
Conclusion:CLINT remains a promising investment within the defensive S-REITs sector, benefiting from India’s economic expansion, digital transformation, and favorable regulatory changes. |
