Clean Water: 3 Water Solutions Companies with Total Debt to Equity below 1x

As everyone knows, water is one of the most important resources across the world. Given the effect of climate change, access to clean water has become more important than ever.

Here in Singapore, we have a robust and diversified supply of water known as the ‘Four National Taps’, which comprises:

Currently, Singapore’s water demand stood at about 430 million gallons a day and that is enough to fill 782 Olympic-sized swimming pools, with homes consuming 45% and the non-domestic sector taking up the rest.
By 2060, Singapore's total water demand could almost double to 860 million gallons a day. The unsatiable demand for water supply bodes well for companies riding on this trend. With that in mind, we will be looking at 3 water solutions companies:

• Memiontec Holdings Limited (SGX: SYM)
• Sanli Environmental Limited (SGX: 1E3)
• Moya Holdings Asia Limited (SGX: 5WE)

Memiontec Holdings Limited (SGX: SYM)

Memiontec Holdings Limited (“Memiontec”) is a Singapore-based one-stop total solutions water treatment company with over 20 years of experience in water and wastewater management services across Singapore, Indonesia and the People’s Republic of China (“PRC”).

The Group’s 4 key business segments are as follows:

Total solutions with engineering, procurement and construction (“TSEPC”) services;
Operation, maintenance and service of water and wastewater treatment plants (“OMS”);
Sales and distribution of water treatment systems and trading (“SDS & Trading”); and Sales of water (“SOW”) through transfer-own-operate-transfer (“TOOT”) and build-own- operate-transfer (“BOOT”) projects, which involve partnerships or joint ventures with public or private entities, for recurring income.

Key Statistics

Latest Result Performance

For 1H FY2021, Memiontec’s revenue has increased by 86.1% year-on-year to S$26.91 million. The sharp rise in its topline was mainly attributed to a higher revenue contribution from its TSEPC and SOW segment, while partially offset by the decrease in the OMS and SDS & Trading segments.

As a result of higher revenue, Memiontec’s profit after tax surged by more than 20 times to S$480,000 for 1H FY2021. However, the profit growth was partially offset by the higher General and administrative expenses and lower other income.

Latest Development

On 30th August 2021, Memiontec has announced that the Group has been awarded two new tenders with a total value of S$12.7 million by Public Utilities Board (“PUB”), Singapore’s National Water Agency. This is in addition to the award of a S$21.7 million contract by PUB to the Group announced in April 2021.

With this latest contract win, Memiontec’s total order book has increased by 16.1% to approximately S$91.6 million.

In terms of outlook, Memiontec predicts that there will be several significant public tenders in the next two years in Singapore relating to Membrane processes and Mechanical, Electrical, Instrument, Control and Automation works for various water reclamation plants and waterworks.

Sanli Environmental Limited (SGX: 1E3)

Sanli Environmental Limited (“Sanli”) is an environmental engineering company 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.

The Company’s business is divided into two main business segments:

• Engineering, Procurement and Construction (“EPC”) segment
• Operations and Maintenance (“O&M”) segment

Key Statistics

Latest Result Performance

For FY2021, Sanli’s revenue declined marginally by close to 10% year-on-year to S$60.5 million. This was mainly due to a revenue decline from its EPC segment while partially mitigated by the higher revenue from its O&M segment.
On a bright note, Sanli’s net profit attributable to shareholder improved by 5.1% year-on-year to S$330,000. The higher net profit was contributed from the higher Other Income such as government grants and disposal of right-of-use assets.

Latest Development
On 15th July 2021, Sanli has announced that the company has been awarded a S$72.67 million contract from PUB. The main scope of the contract is for the construction and commissioning of new disinfection systems at Johor River Waterworks (“JRWW”), located at Kota Tinggi, Johor, Malaysia.

With the award of the Contract, the Group’s total order book stands at S$329.8 million, which is expected to be completed by early 2026. Lastly, the contract from PUB is expected to have a positive impact on its earnings for FY2022.

Moya Holdings Asia Limited (SGX: 5WE)

Moya Holdings Asia Limited (“Moya Asia”) is a Singapore-based investment holding company. The Company is engaged in the investment and development of total water solutions.
The Company operates through Build-Operate-Transfer (“BOT”) business segment. The Company's BOT segment is engaged in the business of providing water treatment solutions to municipalities and government, including commissioning, operation and maintenance of a range of water treatment plants on design, build, operate and transfer arrangements.

Key Statistics

Latest Result Performance

For 1H FY2021, Moya Asia’s revenue grew by 8% year-on-year to S$125.40 million. The slight increase in revenue can be seen from:

• Water sales from Tangerang and Bekasi BOT Projects.
• Finance income under service concession arrangements from the Acuatico Group.
• Six-month revenue contributions from Project Batam.
• Six-month revenue contributions from the Obor Group.

Despite the single digit revenue growth, Moya Asia’s profit after tax surged by 23% year-on-year to S$21.38 million. This can be seen from the slower growth in the cost of sales and lower finance costs.

Conclusion

To conclude, these 3 water solutions companies have a strong track record of experience in the industry. More importantly, some of these companies have clinched various contracts, which will allow them to have visibility in terms of earnings in the long term.

Investors who wish to tap on the burgeoning water solutions industry can perhaps get a head-start by looking at these.

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