Broker: CGS International
Date of Report: July 24, 2026
Excerpt from CGS International report.
Report Summary
Stock Focus: Keppel DC REIT (KDCREIT SP)
Actionable Call: Add (equivalent to Buy)
Target Price: S$2.68
Current Price: S$2.30
Upside: 16.5%
Key Highlights & Actionable Insights:
- Strong 1H26 Performance: 1H26 DPU rose 11.3% year-on-year to 5.714 Scts, with revenue and net property income up 14.5% and 15.1% respectively, driven by full contribution from Tokyo DC 3, positive lease reversions, and stakes in Singapore assets.
- Growth Drivers: Portfolio reversion is expected to stay around 10% in 2H26, with further upside from new leases at Gore Hill DC and additional data hall at SGP 8. Gore Hill income is projected to more than double in FY27 as new leases commence.
- Balance Sheet: Aggregate leverage reduced to 34.0%. S\$673m debt headroom before hitting 40% leverage, supporting future acquisition flexibility. 87% of borrowings are fixed, minimizing interest rate risk.
- Dividend Outlook: FY26-28 DPU estimates raised by 0.3-1.2%. Estimated dividend yield is 4.7% (FY26F), rising to 5.0% (FY28F).
- ESG: LSEG ESG score of B-, maintaining an ‘AA’ in MSCI ESG and Green Star designation for GRESB. KDCREIT targets halving Scope 1 and 2 emissions by 2035 and aims for green certification of all colocation assets by 2030.
- Risks: Weaker occupancy, slower leasing, or higher funding costs could pressure performance.
Summary Analysis: Keppel DC REIT is recommended as an Add with a S$2.68 target price, reflecting strong earnings momentum, positive rental reversions, and robust balance sheet capacity supporting both organic and inorganic growth. Dividend yields remain attractive, and the REIT’s green credentials and ESG improvements offer additional long-term appeal.
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