Keppel DC (AJBU) H1 2024 earnings summary

Executive summary

• 1H 2024 distributable income was $80.9m, up 5.9% from 2H 2023 but down 11.4% year-over-year, with DPU at 4.549 cents, driven by strong rental reversions and a major Singapore contract renewal exceeding 40%.

• Gross revenue rose 11.9% year-over-year to $157.2m, with net property income up 4.2% to $132.6m and profit after tax up 39.8% to $114.6m, mainly from a $31.6m gain on Intellicentre Campus divestment.

• Portfolio comprised 23 data centres across 10 countries, valued at $3.7b as at 30 June 2024, with high occupancy and strategic acquisitions including Tokyo Data Centre 1.

• Active portfolio rebalancing included divestment of Intellicentre Campus, investment in Australia Data Centre Note, and maiden entry into Japan with an accretive acquisition.

• Focus remains on value creation through active asset management, strategic acquisitions, and agile financial strategies.

Financial highlights

• Gross revenue for 1H 2024 increased 11.9% year-over-year to $157.2m, with net property income up 4.2% to $132.6m.

• DPU for 1H 2024 was 4.549 cents, up 5.0% from 2H 2023 but down 9.9% from 1H 2023 due to loss allowance for Guangdong DCs and higher finance costs.

• Settlement sum of $13.3m from the DXC dispute contributed to higher variable rent, with $11.2m distributable in FY2024.

• Earnings per unit increased 39.7% to 6.54 cents; annualised distribution yield was 5.05% as of 30 June 2024.

• Net asset value per unit rose to $1.372 as at 30 June 2024.

Outlook and guidance

• Generative AI, cloud adoption, and digitalisation are expected to drive significant demand for data centres, with Asia Pacific colocation market projected to grow at a 13.3% CAGR to 2028.

• Portfolio performance anticipated to remain robust, supported by high occupancy, positive rental reversions, and strategic acquisitions.

• Singapore market remains tight with high occupancy and rising lease rates, but faces power constraints and sustainability requirements.

• Sustainability and regulatory frameworks are expected to become more stringent, influencing future operations and investments.

• Global economic growth projected at 2.6% for 2024, with inflation moderating to 3.5%.