Seet points out that Sanli’s EPC margin took a great hit due to delay in projects and rise in labour and raw material costs during the Covid-19 period. EPC gross margins have since recovered from 12.7% a year ago to 19.0% in 1HFY2026.
“We believe margins should continue to improve, especially at the net level when it starts to recognise these large contracts won recently,” says Seet.
With a record orderbook of $781.5 million, as well as tenders yet to be announced, such as the $142.5 million Tuas water reclamation plant C3B2 bid, Sanli’s orderbook could potentially surge to more than $900 million by the end of 2025.
“We believe that the record orderbook implies record revenues and profits assuming no issues with execution. We believe Sanli is on the verge of a multi-year growth boom in FY2026 to FY2028,” Seet adds.
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The analyst believes that Sanli is well-positioned for sustained long term growth (FY2026 to FY2036), driven by PUB water-related projects and anticipated Long Island tenders as part of Singapore’s climate change mitigation efforts. 2HFY2026 will likely be much better due to large contracts won recently which will be executed.
With the latest 1HFY2026 results, Seet lowered his FY2026 and FY2027 PATMI estimates by 19.8% and 5.7% respectively, to reflect higher financing costs and slower revenue recognition, resulting in a new target price of 50 cents based on 15.5x FY2027 P/E ratio.
As at 2.45pm, shares in Sanli Environmental remained unchanged at 31.5 cents.
