Tng, in his Nov 24 note, remains upbeat on the company's prospects as he kept his "add" call.
He notes that its earnings growth will has resumed for its 1HFY2026 ended Sept 2025, with a gain of 87% y-o-y to $3.2 million- in line with his expectations.
The 1HFY2026 bottom line was also boosted by $1.5 million gain from the sale of an asset but offset by $1 million in special bonus paid.
In recent weeks, Sanli won two new orders, prompting Tng to raise his earnings forecasts.
The first contract of $281 million, announced on Oct 21, is from the Land Transport Authority (LTA) for works to be done for the Cross Island Line Phase 1 and Cross Island Line – Punggol Extension.
On Nov 10, the Public Utilities Board (PUB) awarded Sanli a $205 million contract for the development of Changi NEWater Factory over two years.
Tng has applied the same FY2027 P/E of 15.9x, which is 2 s.d. above its 4-year FY2022-25 average. However, given the enlarged share base, his target price has been trimmed to 47 cents.
For Tng, key re-rating catalysts would be higher-than-expected order wins and margin expansion, and faster progress in its magnesium hydroxide slurry production business.
On the other hand, downside risks include unfavourable government policies, such as a higher ratio for local labour content or levies that may impact
margins, as well as more intense industry competition, which would presumably lead to compressed margins.
Sanli Environmental shares changed hands at 29 cents as at 10.25 am on Nov 25. Year to date, it is up 190%.
