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.
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.
