RHB Upgrades UOB to “Buy” with Higher Price Target
RHB has upgraded its call for UOB to “buy” from “neutral”, while raising its price target for the lender to S$40.20 from S$35.60 previously.
Reasons for the Upgrade
The new price target is 10.3 per cent above UOB’s latest closing price of S$36.43 and 12.9 per cent above its previous target price on Nov 11. The research house said its new call and price target comes amid a positive 2025 outlook.
Analysts from RHB’s Singapore Research pointed out that UOB’s Asean-centric portfolio may provide investors a “hideout” from the market volatility likely to follow from 2024’s US presidential election outcome.
Benefits of UOB’s Asean-Centric Portfolio
As Asean economies have “relatively low” trade exposure to the US, RHB Global Economics and Market Strategy expects they will post “stable-to-stronger” economic growth for 2025 on sustained strength in trade and manufacturing, as well as tourism.
However, it warned that these economies might be indirectly affected by market volatility through exposure to China.
Other Factors Contributing to the Upgrade
RHB’s Singapore Research analysts also believe that UOB will enjoy benefits as its multi-year investments in platforms and its Citi acquisition “are gaining traction and bearing fruit”.
“We believe some of these benefits were evident in the recent Q3 2024 results – its loan and current and savings account growth of 5 per cent year on year, and 17 per cent year on year outpaced that of peers,” said the analysts.
Positive Outlook for 2025
This leads to a positive outlook for 2025, as the analysts forecast that the bank’s earnings growth will outperform that of the “flat earnings” of its peers in the sector.
“We expect its reported profit after tax and minority interests (Patmi) for FY2025 to grow by 6 per cent year on year, superior to the flat earnings for the sector. On a core basis, we still forecast FY2025 Patmi to rise by 3 per cent,” they said.
Conclusion
In conclusion, RHB’s upgrade of UOB to “buy” with a higher price target is based on the lender’s positive 2025 outlook, driven by its Asean-centric portfolio and multi-year investments in platforms and its Citi acquisition.
FAQs
Q: Why did RHB upgrade its call for UOB?
A: RHB upgraded its call for UOB due to the lender’s positive 2025 outlook, driven by its Asean-centric portfolio and multi-year investments in platforms and its Citi acquisition.
Q: What is the new price target for UOB?
A: The new price target for UOB is S$40.20, which is 10.3 per cent above its latest closing price of S$36.43.
Q: What are the benefits of UOB’s Asean-centric portfolio?
A: UOB’s Asean-centric portfolio provides investors a “hideout” from market volatility, as Asean economies have “relatively low” trade exposure to the US and are expected to post “stable-to-stronger” economic growth for 2025.
