From water to solar and more: Inside Sanli Environmental’s quest to scale

Water is considered ‘liquid gold’ since it is essential for communities and businesses to survive and thrive, and for Singaporean environmental engineering group Sanli Environmental, this evergreen commodity has been a key building block of its business model since it started in 2006. 

For nearly two decades, the homegrown company has stuck to that principle – during its first 15 years it concentrated on building its track record by securing more and bigger government contracts to help build up Singapore’s water infrastructure; in the past few years, Sanli Environmental has embarked on a diversification strategy to develop new engines of growth both domestically and regionally. 

“With PUB as our long-time client since our founding, we have been known as a water specialist for a while. But in recent years, we have undertaken various expansion initiatives into different market segments within the environmental industry to improve our operating margins and harness new opportunities that contribute to our long-term sustainability,” says chief executive officer and executive director Sim Hock Heng.

In addition to its current business model that comprises two business divisions of Engineering, Procurement and Commission (“EPC”) and Operation & Maintenance (“O&M”), it has formed subsidiaries to create five more business divisions. These offer water and waste solutions in the private sector; manufacturing chemicals used in water and wastewater treatment for various industries; renewable energy projects that utilises solar power, dormitory rental and the provision of workplace health and safety training services.

Besides deepening its established presence in Singapore, Sanli Environmental has also expanded to regional markets such as Malaysia, Thailand and Myanmar. “By collaborating with local partners, we aim to create solutions that will boost operational efficiency and reduce carbon emissions, aligning with global sustainability goals.”

While these overseas ventures currently do not account significantly for Sanli Environmental’s revenue, they are necessary steps for the Group’s future, Sim notes. “If we don’t adapt and expand, we risk being left behind. Furthermore, with our strong background in environmental engineering honed over many years, we have many ways to broaden our value propositions in the renewable energy and environmental ecosystem regionally.”

Acceleration of diversification

Reflecting Sanli Environmental’s strong capabilities in the niche water and waste treatment sector, the Group has in recent years strategically focused on expanding its Operations and Maintenance (O&M) business activities, which offer a stable and predictable revenue stream.

Another feather in its cap is being awarded as the contractor for the water management system (mechanical) for Singapore’s first polder project in Pulau Tekong. Sim explains: “Singapore has announced that at least S$100 billion will be needed to protect its shorelines, and being a part of this groundbreaking initiative strengthens our track record in delivering large-scale, first-of-its-kind infrastructure projects, giving us a competitive edge as Singapore rolls out more such polder projects in the future.”

Another potential bright spot lies in the Group’s chemical manufacturing division in Singapore, which focuses on the production of magnesium hydroxide—a versatile chemical compound used in acid neutralization, wastewater treatment, and various industrial applications. In addition to integrating magnesium hydroxide products into its own water and waste treatment solutions, the Group is actively exploring new growth opportunities that target a broader base of industrial users.

Separately, the Group’s renewable energy division has made solid progress in Thailand, having successfully secured solar panel projects totalling 1.5MW. These projects are backed by 15 to 20 year Power Purchase Agreements (PPAs) with reputable customers, ensuring a stable and recurring long-term revenue stream. By generating clean energy directly for end users, the Group is contributing to Thailand’s sustainable energy transition. Capitalizing on growing awareness and government incentives in the renewable sector, the Group intends to secure additional PPA contracts, particularly within the hospitality and industrial sectors.

While the Group has built up an order book of S$252 million (as at 14 November 2024), Sim acknowledges that Sanli is going through a transition period in its diversification. It grew its workforce from 540 to 695 employees in just two years, a contributing factor to overheads that have surged by 55 per cent in the same period. At the same time, scaling up has required increased borrowing to support more projects, leading to higher interest costs.

“That said, the horizon looks promising. If you examine our pipeline for the year, especially in the Singapore market, the opportunities are truly exciting.” The Group is also implementing efficiency and cost-saving measures, such as a recent move to new headquarters that include a large dormitory block for 270 personnel. By housing its foreign workers onsite instead of externally, the Group can reduce accommodation costs and streamline its logistics. 

Sim says: “In addition to cost savings, any un-utilised dormitory space or property space of our headquarters can be leased out to generate extra revenue and maximise asset utilisation.”

Forging relationships for growth

With the future in mind, Sanli also monitors how directors work with and mentor subordinates who could one day make up the company’s second and third generation of leaders, keeping track of and helping them to achieve their career aspirations, motivating them to stay and perform well. The firm also puts together teams where the employees have complementary strengths and can make up for one another’s shortcomings. “After all, nobody is perfect,” Sim says.

Paying close and careful attention to its external relationships has yielded dividends too. Sim shares: “Over time, we have built strong partnerships with multiple suppliers to diversify our sourcing and minimise our concentration risks. This approach enables us to secure essential materials even during periods of supply chain volatility.”

“Transparency is another fundamental principle. We believe in maintaining open and honest communication with our clients, including whenever there are disruptions. We put ourselves in their shoes to explore ways to mitigate their exposure and ensure project continuity. Our experienced senior management team is always hands-on and ready to address challenges.”

With these principles and its diversification strategy gaining traction, Sanli Environmental is ready to make the leap from a homegrown water specialist to a diversified environmental solutions provider in the region. As Sim puts it: “The foundation is set, our direction is clear, and with the right balance of prudence and ambition, we look forward to bolster our business performance in the years to come.”

About Sanli Environmental 

Established in 2006 and listed in 2017 on the SGX-Catalist, Sanli Environmental Limited is an environmental engineering group that specialises in the field of water and waste management. Sanli’s expertise is in the design, supply, delivery, installation, commissioning, maintenance, repair and overhaul of mechanical and electrical equipment as well as process, instrumentation and control systems in wastewater treatment plants, water reclamation plants, NEWater plants, waterworks, service reservoirs, pumping stations and incineration plants.

Backed by its strong engineering capabilities, Sanli has the ability to integrate mechanical, electrical and process engineering expertise to provide customised, cost- and time-efficient integrated engineering solutions and services to its customers. 

Leveraging on its established track record, Sanli has embarked on a diversification strategy to develop complementary business segments beyond its core services, all of which are aimed at developing multiple revenue streams, enhancing business resiliency, and harnessing new opportunities within the environmental industry in the region.

About kopi-C: the Company brew

kopi-C is a regular column by SGX Research in collaboration with that features C-level executives of leading companies listed on SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

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