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DBS Group Research has raised its target price for ComfortDelGro Corporation (CDG) C52 to S$2.06 from S$1.94 previously, with an unchanged "buy" recommendation as it projects value extraction from the transport operator's subsidiary CDG Australia's potential initial public offering (IPO).

In a report on Friday (Nov 8), the research house said it believes that CDG Australia's enterprise value could be worth upwards of A$1.2 billion (S$1.2 billion), on the back of its potential IPO which will see it listed on the Australian Securities Exchange.

A successful IPO should see valuations above 9 times forward enterprise value or earnings before interest, taxes, depreciation and amortisation (EV/Ebitda) for CDG Australia. This translates to a valuation of above S$4.3 billion for CDG, added DBS.

With Grab set to list via a special purpose acquisition company in the US and GoTo possibly looking to see its IPO soon, CDG's private-hire competitors may be subject to increased scrutiny which could reduce aggressive promotions and competition. This indicates that ride-hailing public listings could signal slowing competition cash burn, said DBS.