Report Summary

• Sanli Environmental’s 1H26 core profit was slightly below expectations, but gross margins for Engineering, Procurement, and Construction (EPC) projects have recovered significantly and are expected to continue improving as recent large contracts are recognized.
• The company boasts a record orderbook of SGD781.5m, with potential to exceed SGD900m by end-2025, positioning it for multi-year revenue and profit growth driven by Singapore government water projects and new business segments.
• Maybank maintains a BUY rating on Sanli with a revised target price of SGD0.50, seeing strong upside as major projects are completed and profitability rebounds after Covid-19 disruptions.
• Sanli is expanding into green sectors like solar and waste-to-energy, and maintains strong ESG practices, but faces risks such as execution, margin pressure from aggressive bidding, and high project cash flow requirements.
• Financials indicate a projected rebound in profit and margins from FY26E onwards, alongside a strong balance sheet transition towards net cash by FY28E.