Sinar Mas Business Unit (DSSA) Finds New Growth Engine as Data Centre Capacity Targets 1 GW

PT Dian Swastatika Sentosa Tbk (DSSA) has the potential to secure a new source of growth through the expansion of its data centre business via its subsidiary, DSST. The digital infrastructure arm of the Sinar Mas Group is aggressively increasing its data centre capacity and exploring opportunities to enter deeper into the artificial intelligence (AI) ecosystem.

Aurelia Barus, an analyst at Indo Premier Sekuritas, stated in a research report that DSST, established in 1le96, is a wholly-owned subsidiary of DSSA. DSST focuses on digital infrastructure, data centres, information technology (IT) solutions, and the AI ecosystem. DSST also serves as the holding company for several listed telecommunications and digital businesses, including PT XL Axiata Tbk (EXCL) and PT Mora Telematika Indonesia Tbk (MORA).

The capacity increase includes a 12 MW facility in Tangerang and a 21 MW data centre in Kuningan, Jakarta. The Kuningan facility is a joint venture with LG CNS, which serves as both a technology advisor and operator. According to Aurelia, the entire 21 MW capacity of the Kuningan data centre has already been sold. Approximately 1 MW is allocated to enterprise customers, while the remaining 20 MW is targeted at hyperscalers, primarily from the technology sector.

Notably, the Kuningan facility still has expansion room up to 60 MW. This means there is potential for an additional capacity of approximately 40 MW following the initial phase, which is targeted to begin operations in the fourth quarter of 2026. From an economic perspective, the SM+ data centre business is considered quite attractive. DSST allocates capital expenditure (capex) of approximately US$9 million per MW, including land, or about US$7 million per MW excluding land costs.

Data centre contracts generally have tenures of three to seven years, with shorter tenures typically commanding higher rental rates. Management is targeting an EBITDA margin of 50%-60% and an internal rate of return (IRR) in the double-digit percentage range. In addition to increasing planned capacity, DSST is also exploring the build-to-suit (BTS) model for its next data centre developments.

Aurelia noted that channel checks indicate DSST’s long-term data centre capacity could potentially reach 1 gigawatt (GW). Beyond conventional data centre business, DSST is also exploring opportunities to enter the AI ecosystem, covering segments such as GPU infrastructure, computing, and storage. If realised, this expansion could unlock new growth sources alongside the increasing demand for infrastructure for AI development and processing.

Indo Premier Sekuritas also calculated the potential valuation of DSSA’s data centre business if DSST manages to develop capacity up to 1 GW. Assuming an investment cost of US$9 million per MW, a rental rate of US$150 per kilowatt per month, and a financing structure of 70% debt and 30% equity, the equity value of DSST’s data centre business is estimated to reach IDR 338.9 trillion, assuming a 20x EV/EBITDA multiple. Under the assumption that DSSA owns 100% of this business, DSSA’s total potential market value is estimated to reach IDR 397 trillion, significantly higher than DSSA’s current market capitalisation of approximately IDR 223.5 trillion. However, if DSST only holds a 50% stake in the development, DSSA’s implicit value is estimated at around IDR 245 trillion.

Aurelia explained that this suggests the market has largely priced in the expectations for DSST to reach 1 GW of data centre capacity. While the expansion opportunity offers massive growth potential, from a valuation perspective, much of this expectation seems reflected in the current share price. Therefore, further valuation upside will depend heavily on the actual realisation of the expansion and DSST’s level of ownership in these projects. As of 3:17 PM WIB, DSSA shares rose 0.86% to IDR 1,170 per share, following an 18.17% increase over the past month.