United Overseas Bank Ltd

U11: XSES (SGP)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	SGD 21.00	Ltdmxx	Ctycgsltc

We Lower Our United Overseas Bank FVE to SGD 38 but See Benefits From Citi Deal as Future Catalyst

Michael Makdad

Feb 23, 2023

We maintain our narrow moat rating for Singapore’s United Overseas Bank and lower our fair value estimate to SGD 38 per share from SGD 40 upon a change of coverage analyst and following UOB’s fourth-quarter results. Our new estimate represents a fair price/book ratio of 1.57 times based on year-end 2022 book value and 24% upside from the current share price. Assuming a midcycle return on equity of 13%, this implies a fair price/earnings ratio of 12.1 times and a fair dividend yield of 4.1% assuming a 50% payout ratio.

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