Jason Yap, CFA

Forensic Analyst

Equity Bottom-Up

<ul>
<li>Singapore government introduced a moratorium on new data centres in 2019</li>
<li>As result, incumbent data centre REITs recalibrated their portfolio strategy including to pursue DPU and NAV growth through accretive overseas acquisitions </li>
<li>In Q2 2022, the moratorium is expected to be lifted with conditional approvals for applicants that meet certain sustainability requirements. We discuss the implications for <a href="https://www.smartkarma.com/entities/keppel-dc-reit" target="_blank" data-smartkarma-citation="entities:85:1" rel="noopener">Keppel DC REIT (KDCREIT SP)</a> </li>
</ul>

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

Quiddity Advisors

Event-Driven

<ul>
<li>In this insight, we take a look at the potential index changes for the <a href="https://www.smartkarma.com/entities/ftse-straits-times-index-sti" target="_blank" data-smartkarma-citation="entities:22902:1" rel="noopener">FTSE Straits Times Index (STI) (STI INDEX)</a> between now and the March 2023 index review.</li>
<li>Previously, I expected the <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> - <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> deal to complete in time for SMM to be added to STI during the March 2023 review.</li>
<li>However, that is looking less likely. SMM's addition could get delayed to June 2023 and there might be a longer-period overhang in SMM once the deal completes.</li>
</ul>

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Singapore Exchange Ltd (SGX)

Asia’s leading multi-asset exchange

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 <img src='https://api2.sgx.com/sites/default/files/2022-01/Capture_15.PNG' alt='Keppel Group of S-REITs – Summary of Full Year Results' />
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 <div class='content-caption'>Keppel Group of S-REITs – Summary of Full Year Results</div>
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As at last Friday (Jan 28), 12 S-Reits have reported their full year financial results for the period ended Dec 31, 2021.

The majority reported a year-on-year (yoy) increase in full year distribution per unit (DPU). 
Among them, all three S-REITs under the Keppel Group - Keppel DC REIT, Keppel REIT and Keppel Pacific Oak US REIT - have announced their full year 2021 financial results last week. 
Keppel DC Reit (KDCReit) declared a DPU of 9.851 Singapore cents for FY 2021, a 7.4 per cent increase from 9.170 cents in FY 2020.

This was on the back of a 9.4 per cent y-o-y increase in FY 2021 distributable income, supported by contributions from new data centre acquisitions in Germany, the Netherlands and Australia, as well as the completion of asset enhancement initiatives in Dublin and Singapore.

Looking ahead, the Reit noted that it may also look to potentially acquire assets from its sponsor and Keppel's private data centre fund, which have more than S$2 billion of assets under management and development. 
Keppel Reit declared full year FY2021 DPU of 5.82 Singapore cents, representing an increase of 1.6 per cent year on year.

The Reit noted that the growth in distribution was due mainly to full-year contribution from Victoria Police Centre and Pinnacle Office Park, in Australia, which were added to the portfolio in FY 2020, as well as Keppel Bay Tower, in Singapore, which was acquired in May 2021.

However, the increase was partially offset by the impact of the divestment of 275 George Street, Australia, in July 2021 and lower occupancies in some buildings.

Keppel Pacific Oak US Reit's (KORE) FY 2021 distributable income increased 6.5 per cent year on year, bringing its full year DPU to 6.34 US cents, an increase of 1.8 per cent year on year.

KORE attributed its stronger performance to several factors, including contributions from new acquisitions during the year, as well as positive rental reversions and built-in annual rental escalations across the portfolio.

All three S-Reits under the Keppel Group have made commitments to maintain a sustainable portfolio, guided by the 3 key themes under their sustainability framework - environmental stewardship, responsible business, and people and community.

In particular, KDCReit aims to introduce renewable energy to at least 50 per cent of its colocation assets by 2030, as well as encourage the use of renewable energy at all other portfolio assets.

Keppel Reit 's Keppel Bay Tower, 8 Exhibition Street and Victoria Police Centre are already fully powered by renewable energy while its 8 Exhibition Street asset has achieved carbon neutrality.

All 3 S-Reits also target to achieve at least 20 hours of training hours per employee and contribute to Keppel Capital's target of more than 500 hours of staff volunteerism in 2022.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/real-estate/keppel-groups-s-reits-average-36-dpu-growth-for-fy2021"> read</a><a href="https://www.businesstimes.com.sg/companies-markets/full-steam-ahead-for-s-reits-earnings-season"> </a>the original version.
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Arun George

IPOs and Catalysts/Events

Global Equity Research Ltd

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a>’s 3Q22 results beat both revenue and adjusted EBITDA consensus estimates. Chindata raised its full-year guidance for the second time this year.</li>
<li>Chindata continues to attract rumours of takeover interest, most recently from China Merchants. Its track record of beating guidance, modest leverage and beaten-down rating make it a target. </li>
<li>A forward EV/EBITDA multiple of 10.8x, in line with <a href="https://www.smartkarma.com/entities/21-vianet-group-inc-adr" target="_blank" data-smartkarma-citation="entities:8489:1" rel="noopener">21Vianet Group (VNET US)</a>’s multiple implied by its founder’s offer (at US$8.20), would imply Chindata’s price of US$8 per ADS.  </li>
</ul>

<ul>
<li>In this insight, we take a look at the potential index changes for the <a href="https://www.smartkarma.com/entities/ftse-straits-times-index-sti" target="_blank" data-smartkarma-citation="entities:22902:1" rel="noopener">FTSE Straits Times Index (STI) (STI INDEX)</a> between now and the March 2023 index review.</li>
<li>
<a href="https://www.smartkarma.com/entities/keppel-dc-reit" target="_blank" data-smartkarma-citation="entities:85:1" rel="noopener">Keppel DC REIT (KDCREIT SP)</a> is currently the lowest ranked index constituent and could get kicked out when <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> gets added.</li>
<li>
<a href="https://www.smartkarma.com/entities/olam-group" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam Group (OLG SP)</a> and <a href="https://www.smartkarma.com/entities/sats-ltd" target="_blank" data-smartkarma-citation="entities:19962:1" rel="noopener">SATS (SATS SP)</a> are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.</li>
</ul>

Singapore

Keppel DC REIT is Asia's first pure-play data centre REIT listed on the Singapore Exchange. Keppel DC REIT's investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets.

Keppel DC REIT - KDCREIT SP

Description