• In the ongoing bull market, UOB Kay Hian (stock price: S$3.77) has been on a tear, with its share price nearly tripling since mid-2024. DBS Group Research has initiated coverage on UOBKH with a "BUY" rating, noting the firm's successful evolution from a traditional retail stockbroker into a diversified financial services group. DBS's report comes on the heels of UBS's last month. • DBS's target price for UOB KH stock is S$4.80, a shade above that of UBS ($4.60). • DBS says UOB KH is benefiting from Singapore's equity market revival, while its rapidly scaling wealth management division now contributes roughly one-third of total revenue. • DBS forecasts steady ~4% dividend yields and strong earnings growth through 2027.
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Excerpts from DBS Group Research report
Analyst: Lim Rui Wen
Trading Momentum Accelerates, Wealth Franchise Builds
Multiple engines of growth. UOBKH is evolving from a pure brokerage into a broader financial services group, offering wealth management services to enhance value for clients.
The group's leading regional franchise, extensive distribution network capabilities as one of Singapore’s largest retail brokerages position it to capture structural growth in trading activity driven by Singapore's equity market reforms, while scaling higher-quality recurring wealth management fee income. |
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| Strong revenue growth trajectory to continue |
Revenues grew strongly at >15% CAGR since 2022, primarily led by a similar c.15% CAGR in commission income and c.40% CAGR in trading income.
Momentum of higher trading activities in Singapore and Hong Kong has accelerated into FY26F, with SGX SDAV growing at c.46% y/y during 5MCY26, and HKEX seeing c.14% y/y growth.
We continue to expect commission income and trading income to grow at similar trajectory in FY25A, ~29% and 34% y/y respectively in FY26F, penciling in a ~15% total revenue growth in FY26F and 13% total revenue growth in FY27F.
A strong proxy to Singapore equities market. As one of Singapore’s largest retail brokerages, UOBKH is a direct beneficiary of the ongoing SGX equity market revitalization.
We observed very strong positive correlation (>0.9) between UOBKH’s share price and SGX’s share price, and STI index price, especially so in the last twelve months (R-squared > 0.80).
UOBKH also has high positive correlation to SGX’s securities traded values (>0.8), and is a strong proxy to the Singapore equities market.
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FY Dec (SGD mn) |
2023A |
2024A |
2025A |
2026F |
2027F |
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Revenue |
592 |
670 |
763 |
880 |
995 |
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Net Profit |
171 |
224 |
239 |
275 |
306 |
|
Net Pft Gth (Pre-ex) (%) |
65.9 |
31.0 |
7.0 |
14.8 |
11.5 |
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Net DPS (S cts) |
9.2 |
11.9 |
12.3 |
13.7 |
14.7 |
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BV Per Share (S cts) |
2.1 |
2.3 |
2.3 |
2.4 |
2.6 |
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PE (X) |
19.9 |
15.8 |
15.3 |
13.4 |
12.0 |
We initiate UOBKH with a BUY call, TP 4.80, at c.15x FY27F P/E, which is slightly above +1 S.D. of its historical 15-year forward P/E of 13.9x. UOBKH offers a forward dividend yield of ~4%. Our target P/E multiple is in line with peer average. We believe current valuations do not fully reflect its FY26-27F revenue growth trajectory and improving earnings mix as the wealth segment expands. Key Risks Smaller-than-expected growth in trading values, intensifying competition from fintech brokerages, decline in IPO activities amongst others. |
→ See also:This SG Stockbroker Has Risen Nearly 3X: What does UBS Say About Its Trajectory?
