SINGAPORE (July 5): NRA Capital likes Sanli Environmental for its high tender win rate and laser-focus on projects which have high technical content as well as its high tender win rate.
Tracking Sanli’s PUB tenders on GeBiz over the last four months, NRA Capital notes that the company has a relatively high win rate of 30.8%, clinching four out of the 13 projects it tendeparticipated.
“Among competing bidders with the same BCA registered workheads, Sanli’s track record is impressive as most other bidders have won at most one or two contracts during the same period,” says NRA Capital analyst Liu Jinshu in an unrated report on Wednesday.
On Tuesday, Sanli announced it had won four new contracts with a combined value of $26 million.
See: Sanli Environmental wins 4 contracts worth $26 mil
The company’s order book is now equivalent to close to two years of revenue.
“We estimate that $60 million of its existing order book will be recognised in FY18 ending March 2018, with future contracts contributing another $5 million of revenue also in FY18,” says Liu.
What’s notable is that the four contracts included at least one private sector project of $3 million to $4 million in value, adds the analyst.
Liu traced from GeBiz three PUB projects awarded in June with total estimated value of $22.4 million.
He notes that Sanli’s historical gross margins have been around 18% to 20%. Coupled with cost control at the corporate level, net margin has ranged from 9% to 11%.
That’s because Sanli has been securing contracts with higher engineering and technical content, such as the supply membrane and ozone filtration systems, which may explain for its margins.
To increase its competitiveness, Sanli is expanding its workshop to raise the proportion of internally produced content in its products and services. Thus far, PUB has provided a list of upcoming tenders that we estimate to be potentially worth $100 million or more.
Singapore’s spending on water infrastructure is expected to nearly double to $800 million per annum during 2017 to 2021.
Pipeline projects include a new water reclamation cum NEWater plant in Tuas as part of the Deep Tunnel Sewerage System Phase 2 to start in 2H18, the redevelopment of the Kranji Water Reclamation Plant from 2030 onwards and the construction of the fourth and fifth water desalination plants in Singapore, to be ready by 2020.
With its stronger balance sheet, Sanli will now be capable of taking on larger projects.
As at 11.11am, shares in Sanli are up 1.5 cent on 32 cents.
