The new project wins are expected to lift Sanli Environmental’s engineering, procurement and construction (EPC) revenue for the FY2026 ending March 31, 2026, by 8.3% to $120 million.
“With legacy, low-margin projects nearing completion, margins are expected to increase from 5.5% in FY2025 to 9.5% in FY2026,” write Chan and Liu.
Sanli Environmental is also expected to see “potential growth opportunities” from the “several sizeable” EPC tenders that are expected to be launched in the next 12 months as Singapore continues its investments in infrastructure to improve public services, operational efficiency and urban resilience, the analysts add.
In addition, the group is actively positioning itself to secure a portion of this pipeline by leveraging its Building Construction Authority (BCA) L6 accreditation, strong project execution record with PUB and NEA, and integrated engineering capabilities, they note.
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In their report, Chan and Liu also highlight Sanli Environmental’s operations and maintenance (O&M) business segment, which saw “robust” growth in FY2025, with revenue nearly doubling to $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 [a] slight increase in margins from 20.5% to 21% in FY2026,” they say.
Furthermore, the demand for outsourced maintenance is likely to continue to increase with Singapore’s water infrastructure base expanding with more complex installations such as advanced treatment facilities, pumping stations, and decentralised recycling systems.
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To this end, 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, the analysts add.
Singapore’s commitment to protecting its coastlines also represents a long-term opportunity. The government previously announced that it would require at least $100 billion to protect its shorelines.
“The plan includes large-scale reclamation, drainage systems, and flood mitigation works that align with Sanli Environmental's core engineering competencies. Sanli Environmental is well-positioned to secure contracts from this sustained infrastructure push, further supporting its order book,” say Chan and Liu.
Finally, Sanli Environmental is the only Southeast Asian manufacturer of magnesium hydroxide slurry, which means it has the potential to scale this business into a high-margin revenue stream.
The group completed its first successful major marine vessel top-up in FY2025 after building and certifying its plant over two years, validating product readiness and customer demand, note Chan and Liu.
“Looking ahead, the group is focused on deepening penetration within the marine industry, which is increasingly regulated under IMO 2020 and future emissions mandates,” they add. “Sanli also plans to explore additional use cases for magnesium hydroxide across industrial wastewater and flue gas desulphurisation markets in the Asia-Pacific region.”
Shares in Sanli Environmental closed 0.1 cent lower or 0.64% down at 15.6 cents on July 11. Per the analysts’ estimates, this represents a one-year forward P/E of 7.2 times.
“Using the Catalist board valuation as a reference, the mean P/E of [the] Catalist board is 13.8 times while the median is 10.5 times. Taking a conservative stance, we use the lower 10.5 times P/E and derive the price target of 22.8 cents,” they write.
