Keppel DC REIT: Unlocking Value Through Proactive Asset Management
Keppel DC REIT (KDC REIT), trading at S\$2.21 (up 3 cents), has announced the divestment of its Basis Bay Data Centre in Cyberjaya, Malaysia. This transaction, valued at RM55.6 million (approximately S\$16.9 million), aligns with the REIT’s strategy to optimize portfolio performance. Completion is anticipated around Q3 2025, subject to state authority approvals.
The divestment will terminate the existing master lease and facility management agreements upon completion. This move reflects the manager’s proactive approach, aiming to redeploy resources into accretive opportunities and strengthen the REIT’s global presence in the data center industry.
The property’s valuation, assessed by JLL Appraisal & Property Services, stands at RM53.7 million (approximately S\$16.3 million). Despite the transaction being slightly above market value, the divestment is not expected to materially impact KDC REIT’s net asset value or distribution per unit for FY2025. With a market cap of S\$4.9 billion, the REIT trades at 1.6x price-to-book (PB) and offers a dividend yield of 3.9%. Analysts maintain a “HOLD” recommendation, citing limited upside to the consensus target price of S\$2.37, which offers a 7.2% potential upside.
Marco Polo Marine: Capitalizing on Offshore Wind and Energy Growth
Marco Polo Marine (MPM), currently trading at \$0.053, has faced challenges in FY2024 due to geopolitical tensions and subdued demand for ship repair services. However, the offshore support vessel (OSV) market remains robust, driven by high demand from offshore wind farms and the oil and gas sectors.
The company is constructing a Commissioning Service Operation Vessel (CSOV) in its Batam shipyard, designed to support Asia’s offshore wind sector. The 83-meter-long CSOV, equipped with advanced hybrid energy storage systems, is expected to reduce carbon emissions by 20% and begin operations in the East China Sea by H1 2025.
MPM has also secured a Crew Transfer Vessel (CTV) framework agreement with Siemens Gamesa, spanning 2024–2026, with potential extensions until 2030. This collaboration positions MPM to benefit from growing offshore wind projects in Taiwan and Korea.
Despite a slight earnings miss in FY2024 (core earnings of \$26 million vs. forecasted \$27.5 million), the outlook for FY2025 is positive. MPM expects additional revenue from its new CSOV and dry dock. Trading at 6-7x forward price-to-earnings (PE) and 1x PB, with a 2% dividend yield, the company is rated as “Accumulate on Weakness,” given stable charter rates and potential catalysts from its Taiwan operations.
Shimao Group Holdings: Restructuring Through Asset Sales
Shimao Group Holdings, a previously prominent Chinese developer, continues its restructuring efforts following its 2022 default. The company has reduced the asking price for its Sheraton-branded hotel in Tung Chung, Hong Kong, by 25%, now listed at HK\$4.5 billion (S\$787 million). The hotel, opened in 2020, features over 1,200 rooms and is the city’s second-largest hotel complex by room inventory.
High interest rates and a weakening Chinese economy have led to fire sales of Hong Kong properties, with real estate values in the city dropping by HK\$2.1 trillion since 2019. Shimao’s debt restructuring plan, which has garnered support from creditors holding 80.72% of its in-scope debt, includes this property as part of its supplemental credit enhancement package. The developer plans to hold a creditor vote on the restructuring plan in early 2025.
Market Observations: Institutional and Retail Activity
The week of December 23, 2024, saw significant fund flows in the Singapore market. Institutional investors recorded a net buy of S\$52.9 million, reversing a net sell of S\$385.7 million the previous week. Retail investors, on the other hand, recorded a net sell of S\$73.6 million, compared to a net buy of S\$540.0 million a week prior.
Top institutional net buys included UOB (S\$31.2 million) and Seatrium (S\$18.2 million), while DBS (S\$23.1 million) and SingPost (S\$15.7 million) saw the largest net sells. Retail investors showed a preference for DBS (S\$32.2 million) and SingPost (S\$15.8 million), while Seatrium (-S\$41.3 million) and UOB (-S\$24.8 million) were net sold the most.
Other Notable Highlights
Frasers Property Ltd: Declared a final dividend of 4.5 cents, payable on February 14, 2025.
Thai Beverage: Announced a final dividend of THB47 cents, payable on February 28, 2025.
Marco Polo Marine: Positioned to benefit from global clean energy investments, projected to reach US\$2 trillion in 2024. The offshore oil and gas market is also expected to remain tight, supporting high charter rates for its OSV fleet.
Conclusion
The January 2025 report from Lim & Tan Securities highlights a mixed outlook for the companies covered. Keppel DC REIT’s strategic divestment reflects its proactive asset management approach, while Marco Polo Marine is set to capitalize on opportunities in offshore wind and energy sectors. Shimao Group’s restructuring underscores the challenges faced by Chinese developers amid high interest rates and economic concerns. Investors are advised to consider these insights carefully as they navigate the evolving market landscape.
