Stay invested. Understand good investing requires riding out periods of bad news. 🙏 ADD on further if fundamentals are intact and if still can sleep well 👌🏻
Couple of points: 1) Data Centre Energy cost - take Nvidia A100 -> it easily consumes 300 watts of power (just 1 single GPU Device) and that's before factoring in CPU with huge cores (AMD EPYC easily can hit 300 watts) 2) Most of KDC assets are in Singapore (and common knowledge tells you that Singapore lack energy natural resources, in this case Natural Gas) Most of our power plants burn that to generate energy. If cost spikes up too much, those tech savvy guy would shift else where, where they get cheaper energy resources. KDC (Singapore) does have it's appeal.. "safe from a security perspective", but the rate of growth isn't exponential. 3) On KDC latest earning slides (1st Half June 2023) -35% of their income is dependent on one entity (" One of the largest Tech Companies Globally"), which tells me that you don't get to control them. TBH - when you've have upper hand over someone then you can make money by controlling them in some ways, this how things really work.
I saw in another youtube by you that you had divested Keppel DC Reits in 2022 and now you are buying into it. Does it make sense to sell at a loss and to buy back again.
This is a good question and it triggers some reflections. Selling was in view of how to remain overall invested and the potential decline in tech. It shouldn’t be too late in the cycle, thankfully it wasnt. I chose to keep only MIT and survive from a portfolio perspective. The decline in tech now seems not as bad from new info. 1/2 year ago there wasn’t signs. Of course entry then would be much cheaper The decision to buy is now made independently. Hence the title “invested back”. Hope it answers 👌🏻
Hi Josh, interesting insights on the REIT. Personally, I find the yield of “stable” REITs such as Keppel DC & Parkway to be trading at too low of a value with current interest rates. The yield spread is even negative for parkway if I’m not wrong. I view such REITs as bond like instruments and the reward does not justify the additional equity risk. Just have a question for you; Since such REITs trade at such high P/Bs, why does the property valuation not go up to match this? Let’s say a data centre is $100million and is owned by a REIT which only owns this specific property. It trades at a P/B of 1.5. Since the market values it at $150 Mil, why does it not go up to $150Mil naturally? Does this suggest a wide disconnect between the market and those in the industry? As always, quality video, thanks!
Thanks Ignatius. Yield spread don't compare to T-bills where its 6mths. Compare with 10y. We are in a inverted yield period which is not normal. KDC, MIT and Parkway are trading above PV. Market is pricing in that their assets can be sold above recorded value OR that their rents will grow over time which increases the cap rate and property value. On other hand, most office and shopping mall reits are trading below book value by a lot. Market could be pricing in impairment or drop in rent in future
I watched most of your videos. when quite a handful of videos were praising Suntec REITS, I thought there were some bias then. Good that you moved out of it. Not that Suntec REIT is bad.
Ah… If next week it gets privatized at a much higher price then what I chose wouldn’t look good then. Just moving on coz I came to new conclusions. That’s the hardest part of investing. Not that I’d be 100% right 🙏
I held MIT throughout the bear. Happy with it. Happy with mapletree. At this moment, its more about surviving interest cost. MIT is more leveraged with the Japanese data centre acquisition. Previously in 2020 is which model which has more growth. KDC is more colocation.
@@joshconsultancy thanks for getting back Josh! Was wondering if it is a good time to add more into both KDC and MIT, quite frankly I think that both organisations will handle the interest rate situation decently and survive.
Although there is a AI mania going on, the DC market is way over optimistic and is facing over supply, moreover Keppel DC reits are overvalued from NAV vs price perspective. I think there are better entry levels in the future.
Do you feel that with computers being able to perform more, store more data with smaller unit of space, imagine say, 1 computer can now perform and store the same data as 10 computers in the future, demand for land space might decrease over time?
@@joshconsultancy do you mean computing power or computing demand? because it does not make sense that more data centres will be needed when computing power of computers increases (while size remains the same)
Data centers risks: higher interest expense, departure of large clients, energy prices, and high vacancies in US commercial spaces. PE of 18 is still high.
These are the real elephants in the room. You don't need super expertise to run data centres - there is no IP involved and can be remotely monitored. Anywhere in the world where there are cheaper energy sources, good connectivity, and cheaper rentals, are good places to run the machines. Once the large clients move out, the price and DPU will crash.
Think yield has been hòvering around 5% since it was listed, with some years close to 3% or 4%. And it was low interest environment previously. Looks like yield continues to hover and dpu also not really any breakthrough, but price movement not really mirror these. The price is not really behaving like a reit, but more like a "growth stock"( short of better words). Otherwise, why would anyone wants to buy it at 4+% yield in today's environment.
@@joshconsultancy it is currently trading at about 1.5 times book value. Even if they sell at higher than book value, i doubt they can get a better value relative to the stock price as compared to one that is trading at 0.5 times book value. But I guess ultimately it is the stock price performance that matters.
@JoshTan I think everyone knows to subscribe, but if you keep repeatedly saying it several times in a single video, it is very annoying. If you want to probably say it towards the end. In my opinion if people like what you are sharing they would automatically subscribe and press the like button without the creator asking for it.
LIMITED OFFER - GET 15% OFF ANNUAL SUBSCRIPTION WITH THE EDGE SINGAPORE today!
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@@chewie4018JOSHTES15
What’s the price you entered for Keppel dc reit?
Curious to know what your thoughts are considering the recent plunge in prices. Thanks!
Stay invested. Understand good investing requires riding out periods of bad news. 🙏
ADD on further if fundamentals are intact and if still can sleep well 👌🏻
What is your view on keppel reit
They own offices. Some in Aus. Not my favorite unfortunately 👌🏻
Couple of points:
1) Data Centre Energy cost - take Nvidia A100 -> it easily consumes 300 watts of power (just 1 single GPU Device) and that's before factoring in CPU with huge cores
(AMD EPYC easily can hit 300 watts)
2) Most of KDC assets are in Singapore (and common knowledge tells you that Singapore lack energy natural resources, in this case Natural Gas)
Most of our power plants burn that to generate energy.
If cost spikes up too much, those tech savvy guy would shift else where, where they get cheaper energy resources.
KDC (Singapore) does have it's appeal.. "safe from a security perspective", but the rate of growth isn't exponential.
3) On KDC latest earning slides (1st Half June 2023) -35% of their income is dependent on one entity (" One of the largest Tech Companies Globally"), which tells me that you don't get to control them.
TBH - when you've have upper hand over someone then you can make money by controlling them in some ways, this how things really work.
I saw in another youtube by you that you had divested Keppel DC Reits in 2022 and now you are buying into it. Does it make sense to sell at a loss and to buy back again.
This is a good question and it triggers some reflections. Selling was in view of how to remain overall invested and the potential decline in tech. It shouldn’t be too late in the cycle, thankfully it wasnt. I chose to keep only MIT and survive from a portfolio perspective.
The decline in tech now seems not as bad from new info. 1/2 year ago there wasn’t signs. Of course entry then would be much cheaper The decision to buy is now made independently. Hence the title “invested back”. Hope it answers 👌🏻
Overpriced- you selling low and buying back high
And now it's low again.
Hi Josh, are you concerned about Keppel DC Reit being taken out of STI? Do you think there will be any impact on the share prices moving forth?
That was a few months back. Aware.
Focused on the business fundamentals if next few quarters numbers are healthy
Hi George. At 4.8% yield, what is the buy in price?
Josh not george 😊
Dividend this year is about 10c. Count back from there. Not a target price or a recommendation k
I wondered what happened to the guy who bought siing post ?
not looking too good i fear
I recalled 8mths ago, u are not favouring Kep DC at that time?
Yes I did. I kept an open mind and realized it was time to make a move
Hi Josh, interesting insights on the REIT. Personally, I find the yield of “stable” REITs such as Keppel DC & Parkway to be trading at too low of a value with current interest rates. The yield spread is even negative for parkway if I’m not wrong. I view such REITs as bond like instruments and the reward does not justify the additional equity risk.
Just have a question for you; Since such REITs trade at such high P/Bs, why does the property valuation not go up to match this? Let’s say a data centre is $100million and is owned by a REIT which only owns this specific property. It trades at a P/B of 1.5. Since the market values it at $150 Mil, why does it not go up to $150Mil naturally? Does this suggest a wide disconnect between the market and those in the industry?
As always, quality video, thanks!
Thanks Ignatius. Yield spread don't compare to T-bills where its 6mths. Compare with 10y. We are in a inverted yield period which is not normal.
KDC, MIT and Parkway are trading above PV. Market is pricing in that their assets can be sold above recorded value OR that their rents will grow over time which increases the cap rate and property value.
On other hand, most office and shopping mall reits are trading below book value by a lot. Market could be pricing in impairment or drop in rent in future
Seems like we are both wrong about REITs... The interest rate cuts are priced in, we were wrong and REITs continue going down...
Stay optimistic 👌🏻👍
Yes please do cover suntec reit when you have the time!
Vote noted!
I watched most of your videos. when quite a handful of videos were praising Suntec REITS, I thought there were some bias then. Good that you moved out of it. Not that Suntec REIT is bad.
Ah… If next week it gets privatized at a much higher price then what I chose wouldn’t look good then. Just moving on coz I came to new conclusions. That’s the hardest part of investing. Not that I’d be 100% right 🙏
What are your thoughts of Keppel DC REIT vs MIT?
I held MIT throughout the bear. Happy with it. Happy with mapletree.
At this moment, its more about surviving interest cost.
MIT is more leveraged with the Japanese data centre acquisition.
Previously in 2020 is which model which has more growth. KDC is more colocation.
@@joshconsultancy thanks for getting back Josh! Was wondering if it is a good time to add more into both KDC and MIT, quite frankly I think that both organisations will handle the interest rate situation decently and survive.
Although there is a AI mania going on, the DC market is way over optimistic and is facing over supply, moreover Keppel DC reits are overvalued from NAV vs price perspective. I think there are better entry levels in the future.
POV noted
Yes please do a deep dive on suntec reit
Vote noted!
Is the Edge Singapore under Strait times?
They are their own media company.
Do you feel that with computers being able to perform more, store more data with smaller unit of space, imagine say, 1 computer can now perform and store the same data as 10 computers in the future, demand for land space might decrease over time?
That I dunno. I think the evidence suggest more data centres are needed as computing power increasing
@@joshconsultancy do you mean computing power or computing demand? because it does not make sense that more data centres will be needed when computing power of computers increases (while size remains the same)
Data centers risks: higher interest expense, departure of large clients, energy prices, and high vacancies in US commercial spaces. PE of 18 is still high.
Reits are usually measured in yield and p/BV
These are the real elephants in the room. You don't need super expertise to run data centres - there is no IP involved and can be remotely monitored. Anywhere in the world where there are cheaper energy sources, good connectivity, and cheaper rentals, are good places to run the machines. Once the large clients move out, the price and DPU will crash.
Think yield has been hòvering around 5% since it was listed, with some years close to 3% or 4%. And it was low interest environment previously. Looks like yield continues to hover and dpu also not really any breakthrough, but price movement not really mirror these. The price is not really behaving like a reit, but more like a "growth stock"( short of better words). Otherwise, why would anyone wants to buy it at 4+% yield in today's environment.
Defensive REIT. Same as Parkway which is in healthcare.
Data centre assets when sold are likely above book value also as seen from some disposals
@@joshconsultancy it is currently trading at about 1.5 times book value. Even if they sell at higher than book value, i doubt they can get a better value relative to the stock price as compared to one that is trading at 0.5 times book value. But I guess ultimately it is the stock price performance that matters.
First to comment. Always support
BIG thank you =)
At this price KDC reit is not worth it
What price will be worth it in ur view?
@JoshTan I think everyone knows to subscribe, but if you keep repeatedly saying it several times in a single video, it is very annoying. If you want to probably say it towards the end. In my opinion if people like what you are sharing they would automatically subscribe and press the like button without the creator asking for it.
Do need to ask unfortunately, there are always new viewers. I mean no harm in this and future request, chill, no need to be annoyed =)
@@joshconsultancyoh ya…always have new viewers and forgetful one…lol 😅 I click “like” now🎉
Keppel DC Reit holder here🦾
🦾