Ascendas REITreported a set of commendable 1Q14 results, in line with expectations. New acquisitions and development projects are expected to drive earnings growth in FY14-15F. Acquisitions if any, will be a positive surprise. Maintain BUY, TP adjusted to S$2.50 (Prev S$ 2.60).

M1's 2Q13 net profit of S$39.2m (+11% y-o-y, -4% q-o-q) was inline with ours but 7%-8% below consensus estimates. Half yearly DPS of 6.8 Scts (+3% y-o-y) at 77% payout ratio was 3% below ours and 10% below market expectations. We see downside risk to our FY13F earnings due to potential rise in depreciation expenses with higher capex in 2H13. Consensus underestimates the impact of fair value accounting policy of iPhones. M1 follows fair value accounting policy for iPhones (not for Android phones), which boosted its net profit hugely in 2010 & 2011 during iPhone frenzy. Higher sale of Android phones is hurting its profit due to past burden of accrued handset revenue, which may last for another two years. M1 is not cheap at 18x FY13F & 17x FY14F PE while offering <5% yield. We maintain HOLD on M1.

United Overseas Bankannounced the successful pricing of S$850m in aggregate principal amount of 4.9% noncumulative non-convertible perpetual capital securities. The Capital Securities are perpetual securities but may be redeemed at the option of UOB on 23 July 2018 or any distribution payment date thereafter.

United Fiber Systemhas gone forward with its plan to acquire coal miner PT Golden Energy Mines (Gems) for $1.88 bn in a reverse takeover deal with PT Dian Swastatika Sentosa (DSS). Prior to or on completion of the transaction, UniFiber will be required to consolidate every 30 UniFiber shares into one, such that DSS receives 3.30 billion UniFiber consolidated shares at an issue price of 57 cents apiece. Separately, United Fiber System is proposing to issue 74.6m shares to BDL at an issue price of S$0.02322 per share to settle amounts due and owing to BDL. BDL is a private investment company and currently does not hold any shares in the company. 

Singapore's June NODX fell 8.8% y-o-y, below market expectation of a drop of 5.8%, affected by weaker electronics and pharmaceuticals. On a m-o-m basis, NODX increased 3.2%, vs expectation of 2.4%. Electronics shipments slipped 12.4% y-o-y in June while non-electronics shipments eased 7.1% y-o-y. 

Following a decision by Moody's Investor Services to revise the outlook for Singapore banks to negative from stable, MAS has issued a statement saying that local banks are not at risk and regular stress tests have shown that adequate buffers are in place to cope with the inevitable upturn in the interest rate cycle. MAS added that it other government agencies have taken pre-emptive measures with regards to property market risks.  These include tightening loan-to-value ratios for housing loans, introducing stamp duties on property transactions and shortening loan tenures. For the longer term, MAS recently introduced the TDSR framework.

The Asian Development Bank (ADB) has lowered its growth forecasts for developing Asia this year and the next, citing a softer outlook for the world's second biggest economy China that meant subdued economic activity elsewhere in the region. ADB lowered its growth forecast for developing Asia to 6.3% (previous 6.6%) in 2013 and 6.4% (previous 6.7%) in 2014. Growth estimates for China is also reduced to 7.7% (previous 8.2%) for 2013 and 7.5% (previous 8%) for 2014. ADB forecasts inflationary pressures to be benign due to decelerating growth in the region as well as commodity prices weakness as global demand softens.

Chinese Premier Li Keqiang said the government should not rush into changing policy as long as economic growth stays within the official comfort zone, even as it remains vigilant about a sharper slowdown. State television quoted Mr Li as saying that the government is able to achieve key economic tasks for this year, which reinforces the official view that the 7.5% GDP growth target remains achievable. Many analysts believe the Chinese government will step in to support the economy if year-on-year growth slips in a quarter to 7%, this according to Reuters.

In property news, the first private residential site tender to close since a new debt servicing framework for property loans was introduced has drawn strong demand, surprising market which expected greater caution. Ten bidders contested for the 99-year leasehold site (parcel B) at Tampines Avenue 10. The highest offer came from MCC Land (Singapore), at $562.01 psf ppr, or $289.7m in absolute terms. This was 7.6% higher than the next highest bid.

US markets fell moderately after Coca Cola said volume missed estimates amid slowing economic growth in China & Europe. Goldman Sachs shares dipped even as earnings beat consensus expectations. FED Chairman Ben Bernanke's semi-annual monetary policy report to US lawmakers tonight also led to the modest decline in equity prices following gains in recent sessions.

Source: DBSV