Sanli Environmental (SANLI SP, S$0.228, BUY)

Sanli Environmental Limited is a Singapore-based environmental engineering firm specialising in the design, construction, and maintenance of water and waste infrastructure. Since its founding in 2006 and listing on the SGX Catalist board in 2017, the Group has built a strong track record in delivering public utility projects, particularly for Singapore’s national water agency, PUB. Today, the group operates across three segments, Engineering, Procurement & Construction (EPC), Operations & Maintenance (O&M), and Emerging Business Segments (EBS), with growing exposure to renewable energy and environmental chemical manufacturing.

The Group’s order book stood at S$333.9 million as of 10 July 2025. The Group has recently been awarded a new project by PUB with a contract value of S$105.3 million, which is for the upcoming NEWater plant located within the Tuas Water Reclamation Plant. We expect new project wins to lift FY26 EPC revenue by 8.3% to $120.0 million and with legacy, low-margin projects nearing completion, margins are expected to increase from 5.5% in FY25 to 9.5% in FY26. Several sizeable EPC tenders are expected to be launched in the next 12 months as Singapore continues its critical infrastructure investments to improve public services, operational efficiency and urban resilience. This offers Sanli potential growth opportunities and the Group is actively positioning itself to secure a portion of this pipeline by leveraging its BCA L6 accreditation, strong project execution record with PUB and NEA, and integrated engineering capabilities.

The Group’s Operations & Maintenance business segment delivered robust growth in FY2025, nearly doubling revenue to S$44.2 million. This performance underscores the Group’s success in scaling a stable and high-margin income stream. We expect O&M revenue to increase by 7.6% to $47.6 million, with slight increase in margins from 20.5% to 21% in FY26. As Singapore’s water infrastructure base expands with more complex installations such as advanced treatment facilities, pumping stations, and decentralised recycling systems, the demand for outsourced maintenance continues to rise. The Group is capitalising on this trend by actively pursuing new O&M contracts for long-term servicing of water and wastewater facilities, leveraging on its track record and niche specialisation.

Coastal Protection Plan to spur infrastructure pipeline. Singapore's commitment to coastal protection, exemplified by initiatives like the East Coast Plan, represents a significant long-term opportunity. The government has announced that at least S$100 billion will be needed to protect its shorelines. The plan includes large-scale reclamation, drainage systems, and flood mitigation works that align with Sanli’s core engineering competencies. Sanli is well-positioned to secure contracts from this sustained infrastructure push, further supporting its order book.

The only Southeast Asian manufacturer of magnesium hydroxide slurry. After building and certifying its plant over two years, Sanli completed its first successful major marine vessel top-up in FY25, breaking into the tightly regulated maritime sector. This validates both product readiness and customer demand. Looking ahead, the Group is focused on deepening penetration within the marine industry, which is increasingly regulated under IMO 2020 and future emissions mandates. Sanli also plans to explore additional use cases for magnesium hydroxide across industrial wastewater and flue gas desulfurisation markets in the Asia-Pacific region. With tightening environmental regulations and increasing demand for non-toxic, high-performance neutralisers, the Group has potential to scale this business into a high-margin revenue stream, complementing its traditional engineering services.