According to Tan and Kong in their Jan 26 note, Ultragreen.ai's revenue is 2.6 times larger than the second largest player.
Given the stringent regulatory hurdles, the company enjoys a "sustainable competitive moat".
The global ICG market, according to DBS, was valued at US$173.2 million in 2024 and is projected to grow at an 11.7% CAGR between 2024-2030 to U$335.4 million.
Tan and Kong expect Ultragreen.ai to enjoy earnings growth at a CAGR of 23% expected over FY2024 to FY2027, with growth driven by rising ICG penetration and expanding global reach driving volume growth.
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In addition, they believe that margins will remain "robust", supported by strong pricing power.
Their US$2.05 target price is based on 26x FY2026 earnings, which represents premium of around 20% to the median of peers with a similar business nature.
Together with Citi, DBS is one of the two managers for Ultragreen.ai's IPO last November, when shares priced at US$1.45 each were sold to raise around US$400 million.
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Prior to DBS, UOB Kay Hian had on Dec 3 initiated coverage on this counter with a target price of US$2.
Ultragreen.ai shares closed at US$1.72 on Jan 23, up 2.38% for the day.
