UOB-Kay Hian "Structural tailwinds, cyclical upside" (Buy) Tan

Research evidence excerpt

UOB-Kay Hian "Structural tailwinds, cyclical upside" (Buy) Tan

ating amid

market optimism surrounding the ongoing SG equity market reforms. We see further upside ahead,

as the recent uplift in trading activity reflects not only cyclical factors but also structural drivers (equity

market reforms in SG and improving capital markets activity in HK) that should be more durable and

can sustain commission growth over the medium term, despite a high base in 2026E. Key risk to the

stock is a gradual market share erosion over the medium term given intense competition from

fintechs on both pricing and digital capabilities. That said, UOBKH retains structural advantages that

should help defend its market share in the near term. We forecast c15% EPS CAGR in 2026-27E –

almost double the growth of Asia peers – supporting our higher target multiple of 14x P/E.

EVIDENCE Based on our tracking of monthly traded values across the key markets, the 6mth average traded

value as of May 2026 was up c15-35% y/y, pointing to continued strength in trading activity and

supporting our positive outlook for commission income growth.

WHAT´S PRICED IN? While UOBKH is trading at a relatively elevated valuation of ~15× trailing P/E versus its historical

average (~13x P/E) and regional peers (~13× P/E on average), we believe the premium is largely

justified, supported by c15% forecast EPS CAGR in 2026-27 (UBSe) – almost double the growth of

Asia peers.

Upside/Downside

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Trade and other

Value drivers Net commission receivables Margin lending

Borrowings y/y Borrowing rate

(2026E) income y/y (margin lending) yield

y/y

$5.20 upside 45% 25% 5.1% 25% 3.7%

$4.60 base 33% 15% 4.9% 15% 3.5%