- 1H26 DPU of 5.71 Singapore cents (+11.3% YoY) was in line with our expectations, forming 52% of our FY26e forecast. Growth was driven by the accretive acquisition of Tokyo Data Centre 3, alongside positive rental reversions and escalations across the portfolio, partially offset by the divestment of Kelsterbach Data Centre. DI increased by 18.5% YoY, outpacing DPU growth due to a larger unit base following equity fund raisings to finance acquisitions.
- Rental reversions remained healthy at +10% in 1H26, with 2Q26 reversions moderating to c.5% (1Q26: +51%). 2H26 reversions are expected to be higher, supported by the Gore Hill Data Centre lease renewal, where rents more than doubled and will flow through from 3Q26. Portfolio occupancy declined to 92.5% from 95.6% in 1Q26 due to the expiry of the Cardiff Data Centre contract. Nevertheless, the earnings impact should be less material, as 95% of revenue-generating power capacity remains contracted.
- We maintain ACCUMULATE with a higher DDM-derived TP of S$2.46 (prev. S$2.37). We raise our FY26e/FY27e DPU estimates by 6%/7% to reflect higher rental assumptions and the continued contribution from NetCo Bonds following the termination of the proposed divestment of the Bonds and Preference Shares. Our estimates do not assume any contribution from the Guangdong Data Centres, while the potential recovery of over S$60mn in overdue rent from Bluesea remains a key upside catalyst. We expect FY26e rental reversions to be in the high-teens, driven by the lease renewal at Gore Hill Data Centre, with only 2.6% of rental income due for renewal for the remainder of FY26. The stock currently trades at an FY26e DPU yield of 5.1%.
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