• Memiontec’s net profit has doubled over the past two years from new water projects in Singapore and Indonesia. Recurrent revenue is also building up from their five water projects ain Indonesia.
• Memiontec provides complete solutions in water infrastructure, from design to construction, operations, and maintenance. There is a large addressable market for Memiontec, especially in Indonesia. An investment of US$1.7tr is needed for drinking water infrastructure by 2030.
• Memiontec’s business model is to capture the entire value chain and profit pool from a water infrastructure project. The company completes the entire design, fabrication of equipment, and construction. Upon completion of the project, the company will have two other sources of income. It will have a stake in the water sales to the municipalities and the long-term maintenance contract of the water plant. We believe Memiontec will ride on the twin growth engines of piped drinking water in Indonesia and expand Singapore’s desalination and water reclamation capacity.

Company Background

Established in 1992, Memiontec has nearly three decades of expertise in water treatment, specializing in water and wastewater management services. Operating across Singapore, Indonesia, and the PRC, Memiontec employs membrane, ion exchange, and physical, chemical, and biological processes. Leveraging in-house fabrication and assembly capabilities, it can craft dependable, space-efficient, and innovative water and wastewater treatment solutions, emphasizing reliability and cost-effectiveness. Since its inception, Memiontec has consistently upgraded its BCA contractor registrations, holding ME11 L6, ME02, ME05, SY05, and Class 1 General Builder licenses. Notable achievements in 2022 include being awarded a S$56.6mn contract by PUB – CWRP II C22C (Membrane Bioreactor) and securing the TOOT project at Nusa Dua, Bali, with water sales for 25 years in 2023.

Investment Highlights

• Doubled earnings in two years. Since listing in 2020, Memiontec has secured and invested in three water concession projects in Indonesia. In Singapore, the company was awarded its largest contract to date of almost S$56.6mn from the Singapore Public Utilities Board (PUB). The company has also expanded into new markets, such as Vietnam. Earnings doubled from the jump in the order book.
• Twin engines of growth. We believe Memiontec’s growth will come from a rise in water capacity in Indonesia and Singapore. Indonesia plans to expand its water pipeline, dams, sanitation, and drinking water. The estimated cost of water infrastructure investment until 2030 is US$1tr. Singapore relies on four sources of water: local catchment, imported, desalination, and NEWater (reclaimed water). Water demand in Singapore is projected to double by 2065. Another driver for expanding capacity is ensuring water security from climate change. NEWater supplies 40% of Singapore’s needs and is expected to reach 55% by 2060. Meanwhile, desalination will double from 25% to 50% by 2030. The next market Memiontec aims to venture into is Vietnam.

End-to-end water solutions company. Memiontec has an established track record in water infrastructure projects. In Singapore, it has completed projects in desalination, water reclamation (or NEWater), and sewage treatment. Projects in Indonesia have mostly been drinking water treatment plants and, recently, a desalination plant in Bali. The model in Indonesia includes taking an ownership stake in the project to secure additional recurrent income aside from long-term maintenance contracts.

Source: Phillip Capital Research - 13 May 2024