Core Viewpoint - UBS maintains a "Sell" rating on MTR Corporation (00066) due to unattractive risk/return profile and lowers earnings per share forecasts for 2025 to 2027 by 2% to 12% reflecting higher interest expenses [1] Financial Projections - Target price increased from HKD 21.6 to HKD 24, representing a 30% discount to net asset value per share [1] - Estimated funding gap of HKD 117 billion for MTR from 2025 to 2029 due to rising capital expenditures on new railway projects and increased interest expenses [1] Dividend and Cash Flow Analysis - MTR's dividend yield is 4.7%, compared to an average of 5.4% for leading developers, indicating limited upside for dividends and weak independent credit status [1] - Projected negative free cash flow after dividends for 2025 is HKD -12.98 billion, with further negative projections for 2026 to 2029 of HKD -8.517 billion, HKD -26.369 billion, HKD -34.47 billion, and HKD -35.078 billion respectively [1] - Expected dividend per share for the next two years is HKD 1.31 [1]

Core Viewpoint - UBS maintains a "sell" rating on MTR Corporation, reflecting a lack of attractive risk/reward profile, while lowering earnings per share forecasts for 2025 to 2027 by 2% to 12% due to increased interest expenses [1] Financial Projections - Target price raised from HKD 21.6 to HKD 24, representing a 30% discount to net asset value per share [1] - Estimated funding gap of HKD 117 billion for MTR from 2025 to 2029 due to rising capital expenditures on new railway projects and increased interest expenses [1] Debt and Dividend Concerns - If the land market remains sluggish, the net asset-to-debt ratio (considering perpetual capital securities as debt) could approach 100% by 2029, raising concerns about the sustainability of long-term dividends [1]

Core Viewpoint - UBS reports that since 2020, the rise in high dividend yields and improved transparency in fundamentals have driven the performance of Chinese banks, with a focus on the sustainability of dividends depending on profit outlook and liquidity [1][2] Group 1: Dividend Sustainability - The key issue for Chinese banks is the sustainability of dividends, which relies on profit prospects and liquidity [1] - UBS maintains an optimistic view on the sustainability of dividends and further increases in Chinese bank stocks [1] Group 2: Profit Growth and Forecasts - UBS's base case scenario predicts that Chinese banks will maintain stable profit growth and resume revenue growth from 2026, while keeping provisions steady [1] - The bank expects income transparency to improve from 2025, with net interest margin (NIM) bottoming out in 2026 [2] Group 3: Stock Ratings and Target Prices - UBS raised target prices for several banks, including increasing the target price for Bank of Communications from HKD 5.95 to HKD 8.6 and upgrading its rating from "Neutral" to "Buy" [1] - The target price for Industrial and Commercial Bank of China was raised from HKD 5.98 to HKD 7.79, and for China Construction Bank from HKD 7.4 to HKD 10.2 [1] Group 4: Market Performance - As of July 28, 2023, the MSCI China Bank Index has risen by 79% since the onset of the COVID-19 pandemic, outperforming both Hong Kong and A-share markets [2] - The proportion of H-shares held by southbound funds is expected to double from 19% in 2023 to 41% by 2025, driven by increased inflows, particularly from Chinese insurance companies [2] Group 5: Revenue Sources - Non-interest income, especially from investment and trading activities, is becoming a more significant revenue source, potentially contributing up to 5% of revenue growth by 2029 [2] - Although asset yield remains under pressure, positive deposit rate cuts, robust loan growth, and bond growth are expected to support net interest income [2]

Core Viewpoint - UBS report indicates that since 2020, the rise in high dividend yields and improved transparency in fundamentals have driven the performance of Chinese bank stocks. The sustainability of dividends is now a key issue, dependent on the profit outlook and liquidity of these banks [1] Group 1: Profit Outlook and Dividend Sustainability - UBS's base case scenario predicts that Chinese banks will maintain stable profit growth and resume revenue growth starting in 2026, while keeping a steady provisioning path. The firm holds an optimistic view on the sustainability of dividends and potential further increases for Chinese banks [1] Group 2: Stock Ratings and Target Prices - UBS has raised target prices across the board for Chinese bank H-shares, finding dividend returns above 5% attractive. The investment rating for Bank of Communications has been upgraded from "Neutral" to "Buy," with the target price increased from HKD 5.95 to HKD 8.6 [1] - The firm reiterated "Buy" ratings for Industrial and Commercial Bank of China, China Construction Bank, Bank of China, and CITIC Bank, with target prices adjusted: ICBC from HKD 5.98 to HKD 7.79, CCB from HKD 7.4 to HKD 10.2 [1] - China Merchants Bank's rating has been downgraded from "Buy" to "Neutral" due to high valuation and lower dividend yield compared to peers, with the target price raised from HKD 52 to HKD 56 [1]

Core Viewpoint - There are discussions about whether United Parcel Service (UPS) should cut its dividend, with some suggesting it could create more shareholder value if it did. However, many income investors may not favor this idea, raising concerns about the sustainability of UPS' 6.7% yielding dividend [1]. Financial Concerns - UPS has a dividend payout ratio of a little over 95%, indicating potential risk to its dividend sustainability [3]. - The dividend payout ratio can be misleading as it is based on earnings, which may be affected by non-cash charges like amortization and depreciation [4]. - In Q1 2025, UPS generated nearly $1.5 billion in free cash flow and paid $1.35 billion in dividends, resulting in a payout ratio based on free cash flow of 90%, providing some leeway but still not ideal [5]. Management Insights - UPS CEO Carol Tomé did not mention the dividend in the Q1 earnings call, which may raise concerns among income investors about management's commitment to the dividend [6]. Positive Developments - UPS plans to reduce its Amazon shipping volume by half by mid-2026, which will decrease operational hours by approximately 25 million and lead to the closure of 164 buildings, potentially improving profitability [8]. - The company is implementing efficiency improvements, including automation in 400 facilities by the end of 2025, aiming to cut costs by $3.5 billion in 2025, which could enhance free cash flow [10]. - Recent court rulings may lessen the impact of tariffs imposed by the Trump administration on UPS, potentially benefiting the company's financial outlook [11]. Dividend Sustainability - The current assessment suggests that UPS' dividend is sustainable for now, although the board may still consider a cut in the future. If the efficiency improvements and Amazon reductions yield expected results, a dividend cut may not be necessary for a considerable time [12].