United Overseas Bank - Worth another look on recent underperformance

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: CIMB

Price Call: BUY

Target Price: 19.42

Target S$19.42

UOB shed 3.5% in the two weeks post-results. Although the headline 4Q was not strong, we think it hid some positives, namely 1) expanding margins ahead; 2) promising build-up in US$ deposit base, and 3) a 4Q earnings that could have been 11-12% higher, ex-EU losses. We upgrade UOB to Outperform after the stock's slight underperformance post-results. Our S$19.42 target price (GGM, 1.36x P/BV) is unchanged. We see catalysts from a better 1Q12 when EU debt-related losses no longer impinge on P&L and another quarter of margin expansion drives topline.

Source: CIMB Day Break 14 March 2012, Full PDF Report