For one, the company’s margins are expected to rebound, especially in its engineering, procurement and construction (EPC) segment, as new contracts with higher margins begin in FY2026. In FY2024 and FY2025, Sanli’s margins were reduced due to the higher raw material and labour costs seen during Covid-19, Seet explains.
Over the next two years, the analyst is also expecting Sanli’s revenue to increase by 10% to 15% y-o-y due to its strong orderbook of $333 million as of July 10.
In FY2026, Seet is forecasting Sanli’s FY2026 earnings per share (EPS) to surge by 258% y-o-y, while FY2027’s EPS is expected to be up by 40% y-o-y.
Other positives for Sanli include a strong pipeline of projects, leading to an orderbook that is likely to double “in the years ahead”.
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“Singapore has been investing nearly $1 billion annually in water infrastructure to reduce its reliance on water imported from Malaysia. Sanli has a first-mover advantage due to its track record in polder projects that align with the $100 billion investment to protect Singapore’s shorelines,” Seet writes.
As such, he sees many opportunities locally, especially in the near-term as the results of several key project tenders will be announced.
“We expect Sanli to secure another $200 million - $300 million worth of orders by the end of 2025, potentially doubling its orderbook,” Seet writes.
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In addition, Seet likes Sanli’s new revenue drivers such as its magnesium hydroxide business as well as being pre-qualified for providing the data centre in JohorLand’s water cooling and maintenance systems.
“These are also high margins and potentially huge revenue opportunities for Sanli,” he says.
The company is also likely to be a “prime acquisition target” by larger players looking to “enter this space or acquire an operator with a proven track profile for water-related infrastructure projects in other countries”.
As at 9.15am, shares in Sanli are trading 2 cents higher or 9.5% up at 23 cents.
