• BUY Entry – 27.90 Target – 30.00 Stop Loss – 27.00
  • UOB is Singapore’s third largest largest bank by total assets. As at the end of 2020, it had S$431bn in total assets and generated a net income of S$2.92bn. The bank has more than 500 offices across 19 countries and offers a range of commercial and personal banking products and services. 
  • Rates liftoff. Markets are increasingly pricing in a March rate hike in the US after the improvement in unemployment rate last week. US 10-year yields rose to a high of 1.80% last week to reach pre-pandemic levels. In a step further, economists as surveyed by Bloomberg are now penciling in the prospect that the US Fed may even start balance sheet contraction in the second half of the year.  
  • Positive consensus forecasts. UOB is currently trading at 1.1x FY2021F P/B and offers a 4.2% to 5.2% forecasted dividend yield for FY2021-23. EPS is forecasted to grow at an average of 21% per annum over the next three years. The street is overall bullish on the stock, with 18 BUYS and 2 HOLDS, and no SELL rating. The 12m average target price is S$31.46, implying a 11% upside potential from the last close price. We expect positive fourth quarter results due on the first week of Feb to lead to an upward rerating among banking stocks overall.