Broker: Maybank Research Pte Ltd
Date of Report: August 18, 2025
Sanli Environmental: Singapore’s Water Solutions Powerhouse Poised for Multi-Year Growth

Introduction: Turning on the Taps for Sustainable Returns

Sanli Environmental (SGX: SANLI SP), a leading Singapore-based water treatment and maintenance provider, stands at a pivotal moment in its growth trajectory. With a robust order book, rebounding margins, and emerging high-margin segments, Sanli is strategically positioned to ride Singapore’s national push for water self-sufficiency and infrastructure upgrades.
Maybank Research initiates coverage with a BUY rating and a price target of SGD0.38, representing an impressive 81% upside from the current price of SGD0.21. The valuation is based on a 15x blended FY26/27E P/E, offering investors a compelling entry point for exposure to Singapore’s multi-decade water capex cycle.

Key Investment Highlights

• SGD333m order book (as of July 2025), projected to double to SGD500-600m by end-2025
• Margins set to rebound sharply post-Covid, driving 258% YoY EPS growth in FY26E
• Strong pipeline supported by Singapore’s annual SGD1b water infrastructure investments
• Emerging businesses: Magnesium hydroxide and data centre cooling segments offer high-margin, high-growth potential
• Potential M&A target for larger regional players

Sanli Environmental: Company Overview and Business Segments

Sanli Environmental is a pure-play, locally owned developer and operator of water and waste management infrastructure in Singapore, primarily servicing government contracts through the Public Utilities Board (PUB). With additional operations in Malaysia, Thailand, and Myanmar, Sanli delivers integrated solutions across engineering, chemicals, and maintenance.
Core Segments:

• Engineering, Procurement & Construction (EPC): Design, build, and upgrade water facilities
• Operations & Maintenance (O&M): Recurring contracts for plant upkeep and reliability
• Chemicals Manufacturing (CHM): Magnesium hydroxide production for industrial and marine applications
• Emerging Businesses: Data centre water cooling systems, marine sector expansion

Financial Performance and Outlook

Sanli has demonstrated strong revenue growth and is forecast to accelerate as new, higher-margin contracts replace legacy Covid-era projects. The order book covers nearly two years of future revenue, setting the stage for multi-year profit expansion.

Order Book Growth and Revenue Visibility

• Order book as of July 2025: SGD333.9m
• Projected order book by end-2025: SGD500-600m
• Main pipeline: PUB water infrastructure projects, coastal protection works, polder development, and facility upgrades
• Potential for order book to hit SGD1b by end-2026
• Maintenance contracts (O&M) revenue surged from SGD15m (FY22) to SGD44m (FY25), and expected to grow steadily with stable margins (~20%)

Margins Set for Recovery: From Covid-Era Lows to New Highs

Sanli’s profitability was temporarily depressed by Covid-era projects with fixed prices and surging input costs. Most of these contracts have now expired, paving the way for margin normalization.

Strategic Positioning: Beneficiary of Singapore’s Water Self-Sufficiency Drive

Singapore’s government invests nearly SGD1b annually in water infrastructure to reduce reliance on Malaysian imports. Sanli enjoys first-mover advantage, a proven track record with PUB, and is well-positioned for upcoming tenders, including the Changi NEWater Facility 3 (SGD205m bid).

• Sanli’s technical expertise in polder projects aligns with the SGD100b national coastal protection plan
• Consistent pipeline of recurring and new projects: Expansion of “Four National Taps,” NEWater, desalination, recycling mandates for industrial users
• Maintenance revenue base provides stability, while EPC wins drive profit surges

Emerging High-Margin Segments: Chemicals and Data Centre Cooling

Magnesium Hydroxide Manufacturing:

• Sanli’s new plant ramps up slurry production for marine and industrial customers, with gross margins estimated at 30-50%
• Capacity: 1,000 tonnes/month (expandable to 4,000 tonnes/month)
• Rapid scaling potential as vessel top-ups accelerate from 3 (Aug’25) to 12 (Q1’26)

Data Centre Cooling Solutions:

• Pre-qualified for water-cooling system contracts in Malaysia’s booming data centre market, with global trend toward liquid cooling adoption

Shareholder Returns: Rising Dividend Yield and Payout Policy

Sanli’s dividend yield is set to climb as profits rebound. The group maintains a 30% payout policy, with yields projected to grow from 3.1% (FY26E) to 5.6% (FY28E).

Peer Comparison: Sanli vs. Singapore and Regional Water Players

Sanli trades at a discount to regional peers, offering greater upside potential due to its smaller market cap and accelerating growth.

ESG Performance: Strong Alignment with Sustainability Goals

Sanli is inherently ESG-aligned, with a focus on environmental stewardship, chemical manufacturing, and solar energy. The company has maintained zero safety incidents (FY2023–FY2025), strong compliance, and independent oversight. Areas for improvement include board gender diversity and enhanced ESG disclosures. The company adheres to GRI and TCFD, holds ISO certifications, and is actively expanding its solar and waste-to-energy projects.

Risks to Watch

• Client concentration: Over 90% of revenue from PUB; changes in government procurement could impact results
• Execution risk: Overseas expansion into Malaysia/Thailand brings regulatory and delivery challenges
• Margin pressure: Aggressive bidding, rising labour costs, and supply chain risk may impact profitability
• Financial exposure: High gearing (101.6% FY24A, 135.3% FY25A), though forecast to drop below 5% by FY28E
• Project delivery: Legacy Covid-era contracts have compressed margins; new contracts expected to restore profitability
• Credit risk: 66% of trade receivables concentrated among 3 customers (FY25)

Leadership Team

• Sim Hock Heng: CEO and Executive Director, co-founder, 25+ years in water/waste management
• Kew Boon Kee: Deputy Chairman and Executive Director, co-founder, drives business diversification and M&A
• Tan Thean Seang, Fredrik: Chief Financial Officer, Chartered Accountant, leads finance, IR, and M&A
• Lee Tien Chiat: Executive Director, heads Chemicals Manufacturing and EPC execution

Conclusion: Sanli Environmental — A Strategic Bet on Singapore’s Water Future

Sanli Environmental offers investors exposure to Singapore’s critical water infrastructure upgrade cycle, with significant upside from margin recovery, order book expansion, and new high-margin business lines. With robust ESG credentials, rising dividend yields, and a potential for M&A, Sanli is well-positioned for multi-year growth.
Investors seeking a resilient, tariff-free play on Southeast Asia’s water sector should consider Sanli for its proven execution, strong government ties, and emerging growth engines.