UOB - Nomura cuts UOB to 'neutral', lowers target price

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD
Research House: Nomura

Nomura has downgraded United Overseas Bank to “neutral” from ”buy” and lowered its target price to $21.30 from $22.80. The brokerage recommended that investors switch to Oversea-Chinese Banking Corp.

STATEMENTS: 

Nomura said that UOB is unlikely to sustain historical return on equity and valuation premiums in the medium term due to its conservative management, relatively narrow earnings drivers and unexciting ASEAN-centric growth strategy. 

The brokerage said that UOB has the strongest balance sheet in the sector, but its peers have a more balanced combination of growth and quality. 

Nomura added that UOB’s ASEAN strategy of serving the commercial banking needs of mostly Chinese retail customers and small and medium enterprises pales in comparison to rival OCBC’s multi-product, multi-target market strategy. 

“OCBC is increasingly better positioned to expand in high-growth, high-margin markets like Malaysia and Indonesia,” Nomura said in a report. 

At midday, UOB shares were down 1.5% at $18.62 on a volume of 1.5 million shares. 

UOB is Singapore’s third-largest bank after DBS and OCBC.