Vacant, non-DC NLA poses potential for conversion to data centre (DCs), making KDC a beneficiary of tapering DC supply in Singapore. Currently, 22,178 sqft of NLA – 6.4% and 15.8% from KDC SG 1 and KDC SG 5 – are non DC space. KDC is in the midst of getting government approval to bring more IT power onsite to convert the space at KDC SG 5 to DC space.
Maintain ACCUMULATE with a higher target price of $2.06 (previously $2.00)
We raise our estimates by 2% to reflect the strong demand for DCs admist the tightening DC supply. Our TP of $2.06 implies a 3.8%/4.46% FY19e/FY20e DPU yield.