As of July 2024, Singapore has a total of 1.4 GW of total IT capacity, of which over 1GW is operational, according to DC Byte. Tight supply and robust demand have also translated to high utilisation rate of 99.1% over this period.
As such, Lock has maintained his “buy” call for Singapore Telecommunications (Singtel) with a target price of $3.70.
She sees minimal near-term earnings risk as data centre contributions currently make up 5% of Singtel’s EBITDA and is projected to rise to 8% by FY27.
"Singtel currently has 62MW of operational IT capacity in Singapore, with an additional 58MW set to come online (DC Tuas project) in 1QCY26. We understand that DC Tuas already has a high commitment rate from hyperscalers (as shared during its Investor Day 2024), and we believe Singtel would likely have hedged its chip requirement based on the committed demand, thus reducing potential risk of delayed commencement of the project," she adds.
Lock has also called for “buy” on Keppel DC REIT (KDC REIT) with a target price of $2.48.
According to her, KDC REIT generates 65.5% of its rental revenue from Singapore post the purchase of SGP7 and SGP8 DCs, based on management’s proforma September 2024 estimates.
"These properties have in place leases with a remaining weighted average lease to expiry of 1.2-11.5 years, providing KDC with income sustainability. Hence, we believe the new restriction could likely have limited impact," she says.
As at 2pm, shares in Singtel are trading 1 cent higher or up 0.32% at $3.15, while shares in KDC are trading 5 cents higher or up 2.26% at $2.26.
