DBS initiates UOB Kay Hian coverage with ‘buy’, S$4.80 target price
UOBKH investors can look forward to a dividend yield of about 4%, says the research house
[SINGAPORE] DBS Group Research has initiated coverage on UOB Kay Hian (UOBKH) with a “buy” call and a target price of S$4.80.
The research house in a Jul 3 note said the brokerage is well-positioned to benefit from multiple growth engines as it pivots from a pure brokerage into a broader financial services group.
A central pillar of DBS’ bullish thesis is UOBKH’s deliberate expansion beyond traditional equities brokerage to scale its wealth management services.
UOBKH has significantly broadened its product suite to include coupon notes, structured notes, bonds and unit trusts, supported by dedicated wealth advisory teams, noted DBS.
Today, the wealth segment accounts for about one-third of UOBKH’s total revenues.
This diversification into higher-quality recurring fee income is expected to improve earnings visibility, enhance return on equity and support a structural rerating over time.
Proxy to SGX revival
As one of Singapore’s largest retail brokerages – capturing close to half of the total retail market share alongside Phillip Securities – UOBKH stands out as a direct beneficiary of the ongoing revitalisation of the Singapore equity market, said DBS.
Trading momentum has accelerated significantly heading into FY2026. Driven by ongoing efforts such as the Monetary Authority of Singapore’s Equity Market Development Programme, the Singapore Exchange (SGX) saw its securities daily average value (SDAV) surge by roughly 46 per cent year on year in the first five months of 2026.
The Hong Kong market also contributed positively, recording a 13.6 per cent year-on-year SDAV growth over the same period.
DBS analysts noted a very strong positive correlation – exceeding 0.9 – between UOBKH’s share price and both the SGX’s share price and the Straits Times Index.
Robust financials and dividend yield
Financially, UOBKH has also demonstrated a strong growth trajectory, noted DBS. Revenues have grown at a compound annual growth rate of over 15 per cent since 2022, primarily led by strong growth in commission and trading income.
Looking ahead, DBS pencilled in a 15 per cent total revenue growth for FY2026 and a 13 per cent growth for FY2027. Investors can also look forward to a dividend yield of about 4 per cent.
This yield is supported by the company’s dividend policy, which maintained a 50 per cent payout of distributable profits during FY2024 and FY2025, a ratio DBS expects will continue into FY2026 and FY2027.
At current valuations of about 13 times FY2026 price-to-earnings, DBS said it believes the market has not fully priced in the company’s revenue growth trajectory and improving earnings mix.
However, the research house cautioned investors on several key risks. These include smaller-than-expected growth in trading values, a potential decline in initial public offering activities, and intensifying competition from low-cost fintech brokerages expanding into Asian emerging markets.
