U11.SI · SES · Financial Services

United Overseas Bank Limited

Also onConsensus Drift

Implied value per share

SGD 76.64

Market price

SGD 41.78

Implied upside

+83.4%

5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.

AdjustedCapital expenditure runs at 6.9% of revenue against depreciation of 4.9%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

Value Per Share

Perpetuity growth

SGD 76.64+83.4%

Exit multiple

SGD 62.95+50.7%

Market price

SGD 41.78

Same forecast, different terminal treatment. Percentages vs price.

Assumptions

Discount rate (WACC)6.87%Growth after the forecast2.50%Exit EV/EBITDA8.1xTax rate16.79%Capex, % of revenue6.90%Depreciation, % of revenue4.86%Working capital, % of revenue growth-100.00%

Forecast Cashflows

Reporting currency (SGD). Outflows negative.

Nominal FCFFDiscounted to todaySGD

Line	FY26	FY27	FY28	FY29	FY30	CAGR
Revenue	SGD 14.6bn	SGD 15.5bn	SGD 16.5bn	SGD 17.5bn	SGD 18.5bn	+6.0%
EBIT	SGD 7.0bn	SGD 7.4bn	SGD 7.8bn	SGD 8.3bn	SGD 8.8bn	+6.0%
NOPAT	SGD 5.8bn	SGD 6.1bn	SGD 6.5bn	SGD 6.9bn	SGD 7.3bn	+6.0%
Add depreciation & amortisation	SGD 712.2m	SGD 755.3m	SGD 800.9m	SGD 849.4m	SGD 900.8m	+6.0%
Less capital expenditure	SGD -1.0bn	SGD -1.1bn	SGD -1.1bn	SGD -1.2bn	SGD -1.3bn	+6.0%
Less increase in working capital	SGD 835.0m	SGD 885.5m	SGD 939.1m	SGD 995.8m	SGD 1.1bn	-6.0%
Free cashflow to firm	SGD 6.3bn	SGD 6.7bn	SGD 7.1bn	SGD 7.5bn	SGD 8.0bn	+6.0%
Discount factor	0.9673	0.9052	0.8470	0.7926	0.7416	-
Present value	SGD 6.1bn	SGD 6.1bn	SGD 6.0bn	SGD 6.0bn	SGD 5.9bn	-0.8%
Present Value Of The Forecast	SGD 30.1bn

Discount Rate

Source shown per component. All overridable above.

Risk-free rate	4.20%	USD assumption - no free live source available for this market (assumption)
Equity risk premium	6.50%	Market assumption
Beta	0.583	Reported 0.378, pulled toward 1.0 (Blume)
Cost of equity	7.99%	Risk-free + beta x equity risk premium
Cost of debt	6.20%	Implied cost of debt of 25.9% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
Market capitalisation	SGD 68.9bn	60.3% of capital
Total debt	SGD 45.3bn	39.7% of capital, book value as a proxy
Tax rate	16.8%	Effective, capped at statutory
WACC	6.87%	E/V x Re + D/V x Rd x (1 - t)

Terminal Value

Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

Perpetuity growth at 2.50%

Value per shareSGD 76.64

73% of EV

Forecast FCFF, final year: SGD 8.0bn
Capex at depreciation, working capital in reinvestment: SGD 7.4bn
Less reinvestment at g/ROIC (36.4% of NOPAT): SGD -2.7bn
Capitalised: SGD 4.7bn
ROIC (WACC floor): 6.9%

Terminal value, undiscounted: SGD 109.7bn
Terminal value, discounted: SGD 81.4bn
Enterprise value: SGD 111.5bn
Less net debt: SGD -16.6bn
Equity value: SGD 128.1bn

Exit at 8.1x EBITDA

Value per shareSGD 62.95

66% of EV

Terminal value, undiscounted: SGD 78.8bn
Terminal value, discounted: SGD 58.5bn
Enterprise value: SGD 88.6bn
Less net debt: SGD -16.6bn
Equity value: SGD 105.2bn

Spread between methods: 20%.

Sensitivity

Value per share (SGD) by discount rate and long-run growth.

Long-run growth
Discount rate	1.50%	2.00%	2.50%	3.00%	3.50%
4.87%	109.46	113.60	119.36	128.05	142.89
5.87%	87.96	88.61	89.38	90.31	91.53
6.87%	76.17	76.40	76.64	76.88	77.12
7.87%	67.90	68.10	68.30	68.50	68.70
8.87%	61.50	61.67	61.84	62.01	62.18

Outlined: this model. Green text: above today's price of 41.78. Shading: distance from this model's own value.

Priced In

What each input would have to be to justify the current price, one at a time.

Input	Model	Implied	Gap
Revenue growth, every year	6.0%	-8.1%	-14.1pp
EBIT margin	47.5%	22.1%	-25.5pp
Discount rate	6.9%	14.7%	+7.8pp

Download as Excel

Live formulas, not pasted numbers - edit a driver and the workbook reprices.

Yahoo Finance and RBA data. General information, not advice. Methodology.