UOBKH initiates coverage on UltraGreen.ai with ‘buy’ on optimistic growth outlook

[SINGAPORE] UOB Kay Hian (UOBKH) initiated coverage on medical technology company UltraGreen.ai with a “buy” call, citing its market dominance in supplying indocyanine green (ICG) used in surgical procedures, and potential for “strong earnings growth”.

The brokerage assigned the stock a target price of US$2, implying an upside of 37.9 per cent from UltraGreen.ai’s initial public offering (IPO) price of US$1.45 per share.

The target price is pegged to a 26 times price-to-earnings (PE) ratio based on UOBKH’s FY2026 projections. UltraGreen.ai trades at a 17.1 times PE ratio, compared with its peers’ average of 32 times, the analysts added.

“We expect its continued strong earnings growth, attractive margins and better price discovery to catalyse a valuation re-rating,” said analysts John Cheong, Heidi Mo and Tang Kai Jie in a report on Tuesday (Dec 2).

Market research from Frost & Sullivan shows that UltraGreen.ai is the world’s largest supplier of ICG, with around 68 per cent of market share by vials sold and 63 per cent of revenue share in 2024. The company also develops fluorescence-guided surgery (FGS) technology and offers fluorescence imaging services.

“Its dominance is supported by high regulatory barriers, exclusive supply agreements for active pharmaceutical ingredients, and entrenched relationships with contract manufacturing organisations,” said the brokerage.

Riding strong industry tailwinds

While FGS adoption remains underpenetrated globally – below 25 per cent in the US and lower in the Asia-Pacific region, it is expected to climb with growing clinical evidence and wider system availability, said the analysts.

Between FY2024 and FY2027, UOBKH projects a three-year compound annual growth rate of 21 per cent in revenue and 22 per cent in earnings. This is on the back of higher procedure volumes, growing adoption in Asia-Pacific and continued premium pricing.

The company’s projected 2025 gross margin of 84.8 per cent and net margin of 42.7 per cent are significantly higher than its medtech peers’ averages of 69.5 per cent and 21.1 per cent, respectively, noted the analysts.

UltraGreen.ai debuted on the Singapore Exchange’s mainboard on Dec 3 with a market capitalisation of around US$1.6 billion. The company’s IPO marks the biggest one on the local bourse since 2017, excluding real estate investment trust listings.

UOBKH forecasts dividend yields of 2.7 per cent in FY2025, 1.8 per cent in FY2026 and 2.1 per cent in FY2027.

Shares of UltraGreen.ai closed 0.7 per cent or US$0.01 down at US$1.44 on Friday, with about 8.2 million shares transacted.