Keppel DC REIT - OCBC Investment 2017-05-29: Performed Well Since Our ‘laggard Play’ Recommendation

KEPPEL DC REIT AJBU.SI

Keppel DC REIT - Performed Well Since Our ‘laggard Play’ Recommendation

Since we reiterated our conviction idea on Keppel DC REIT (KDCREIT) as one of our top picks within the S-REITs sector and highlighted it as a laggard play in our S-REITs sector report dated 6 Mar 2017, its share price has not only rebounded 9.9%, but also hit an all-time high of S$1.28 last week on 26 May.

As a recap, KDCREIT recently reported 1Q17 DPU growth of 13.2% YoY to 1.89 S cents. Even after stripping out a one-off capital distribution, adjusted DPU still grew 4.2% YoY to 1.74 S cents.
As KDCREIT’s policy is to pay out its distributions on a semi-annual basis, we believe this would lend support to its share price leading up to its 2Q17 results in Jul.
Operationally, we continue to like KDCREIT for its defensive attributes, given its long portfolio WALE of 9.2 years (as at 31 Mar 2017). At current price level, we continue to see meaningful upside potential ahead, and maintain our BUY rating and S$1.39 fair value estimate.
Supported by FY17F distribution yield of 5.7%, this translates into potential total returns of ~14.0%.

Andy Wong Teck Ching CFA OCBC Investment | http://www.ocbcresearch.com/ 2017-05-29

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 1.390 Same 1.390