<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 14, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>A S'pore firm run by a S'porean
Sinomem is only Chinese in its focus, reports VEN SREENIVASAN
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>NOTHING upsets Lan Weiguang more than hearing his mainboard-listed company, Sinomem Technology Ltd, being called an 'S-chip'.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Dr Lan: Was born in China, came to study at the National University of Singapore in the early 1990s and has been a Singapore citizen for 13 years </TD></TR></TBODY></TABLE>'We are a Singaporean company, but with a China-focused business,' he said. 'Although I was born in China, I came to study at the National University of Singapore (NUS) in the early 1990s, and have been a citizen of this country for 13 years. My children were born here, and my son served national service.'
Indeed, given the tattered reputation of S-chip companies of late, one can understand Dr Lan's indignation. More so, given the fundamentals of his company.
The founder and managing director of Sinomem was among the first batch of Chinese scholars who won PhD scholarships from the Singapore government to do research studies here. After graduating, he worked here for a few years, including a two-year stint at a subsidiary of Hyflux. He then brought his entire family to Singapore in the early 1990s.
In 1996, the PhD holder in chemistry set up Sinomem, which subsequently listed here in June 2003.
<TABLE border=0 cellSpacing=0 cellPadding=5 align=left><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox border=0 cellSpacing=0 cellPadding=0 width=144 align=left><TBODY><TR><TD vAlign=bottom>
</TD></TR><TR><TD bgColor=#fffff1><TABLE border=0 cellSpacing=0 cellPadding=0 width=124 align=center><TBODY><TR><TD vAlign=top>'The water scarcity problem in the northern regions means there are opportunities for water purification and recycling.'
</TD></TR><TR><TD vAlign=top>
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>By then, Sinomem already had an established reputation for its advanced membrane technology and clean water solutions for the pharmaceutical, nutraceutical, food and beverage industries, controlling almost 100 per cent of the market share in China for Vitamin C, Vitamin B12 and several antibiotics.
'But we were dependent on the capex spending of these companies, and sometimes had to compromise on margins as affordability was an issue for some of the smaller players,' he recalled.
Sinomem's breakthrough into the waste water treatment business came amid the Songhuajuang river pollution crisis in Jilin province of northern China earlier this decade.
'I was having dinner with a senior official of the municipality which was hit by the incident,' Dr Lan recalled. 'During the conversation, he enquired about my business and I explained that we were a biotechnology membrane solutions provider for the nutraceuticals businesses. He asked me if I could have a look at the water treatment plants in his municipality.'
And what he found surprised him. 'These treatment plants were essentially civil engineering EPC (engineering, procurement and construction) installations whose capacity and capability to provide continuous and consistent waste water treatment was limited,' he said.
The rest is history, as he put it.
'Water treatment cannot be approached as a purely civil engineering undertaking,' Dr Lan explained. 'It has to be an integrated technological process.'
Years of working with the pharmaceutical industry has enabled Sinomem to develop some of the most advanced membrane technologies available today. Its Bio-Cel bioreactor membrane is rated among the best worldwide and is currently being tested in Singapore for Newater recycling applicability.
The company has 19 municipal build-operate-transfer (BOT) projects in various parts of the water-scarce provinces in northern China, especially in Jilin. The current capacity of 300,000 tonnes per day will increase to 560,000 tonnes per day when all the plants come onstream.
These BOT projects come with 20 to 30 year concessions and minimum offtake guarantees of 80-90 per cent in the first two years of operation, rising to 100 per cent in the third year.
Going by the numbers, the future looks good for Sinomem.
Four-fifths of China's water resources are concentrated in the Yangtze Delta and southern China. To tackle this, the Chinese government diverts river water from the Yangtze River to the arid north. But these routes run through the populous and industrial provinces of Jiangsu, Shandong, Henan and Hubei, prompting the government to raise waste water treatment discharge standards and shut down polluting industries in these regions to ensure the quality of the diverted water. The government has already set aside some one trillion yuan (S$209.1 billion) to boost waste water treatment capacity under its current Five-year Plan.
For water players, getting the project is not the issue, Dr Lan added.
'The challenge is to make a sufficient margin. This is because the tariffs are fixed by the governments,' he explained.
He insisted that Sinomem has the technological capability to keep costs down.
Analysts agreed that the company is on a strong footing for stable cash flows ($23 million in cashflow during the first half) and recurring income for an extended period of time.
Having raised some $31 million via a placement of 50 million new shares at 62 cents a piece last week, Sinomem now has a net $45 million in its kitty, Dr Lan said - enough to push ahead for more BOT projects in water scarce northern China.
The company is now looking to boost income via the supply of treated and recycled discharged water to nearby industrial consumers.
'The water scarcity problem in the northern regions means there are opportunities for water purification and recycling as well,' Dr Lan said.
Sinomem's water business has recently replaced its traditional membrane process, and engineering and biochemical production business as the largest profit contributor. About 55 per cent of its 1H09 core profit of $10.6 million came from the water business.
Meanwhile, Dr Lan's profile in the scientific community - especially in China - remains high. He is currently an adjunct professor in the prestigious Peking University, Xiamen University, and NUS.
But he is more concerned with the branding of his company.
'Please inform your readers we are a Singaporean company with a solid presence in the water solution business in China,' he said. [/FONT]
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>A S'pore firm run by a S'porean
Sinomem is only Chinese in its focus, reports VEN SREENIVASAN
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>NOTHING upsets Lan Weiguang more than hearing his mainboard-listed company, Sinomem Technology Ltd, being called an 'S-chip'.<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Dr Lan: Was born in China, came to study at the National University of Singapore in the early 1990s and has been a Singapore citizen for 13 years </TD></TR></TBODY></TABLE>'We are a Singaporean company, but with a China-focused business,' he said. 'Although I was born in China, I came to study at the National University of Singapore (NUS) in the early 1990s, and have been a citizen of this country for 13 years. My children were born here, and my son served national service.'Indeed, given the tattered reputation of S-chip companies of late, one can understand Dr Lan's indignation. More so, given the fundamentals of his company.
The founder and managing director of Sinomem was among the first batch of Chinese scholars who won PhD scholarships from the Singapore government to do research studies here. After graduating, he worked here for a few years, including a two-year stint at a subsidiary of Hyflux. He then brought his entire family to Singapore in the early 1990s.
In 1996, the PhD holder in chemistry set up Sinomem, which subsequently listed here in June 2003.
<TABLE border=0 cellSpacing=0 cellPadding=5 align=left><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox border=0 cellSpacing=0 cellPadding=0 width=144 align=left><TBODY><TR><TD vAlign=bottom>
</TD></TR><TR><TD vAlign=top>
- Sinomem founder and managing director Lan Weiguang
</TD></TR><TR><TD vAlign=top>
</TD></TR></TBODY></TABLE></TD></TR><TR><TD height=39>
'But we were dependent on the capex spending of these companies, and sometimes had to compromise on margins as affordability was an issue for some of the smaller players,' he recalled.
Sinomem's breakthrough into the waste water treatment business came amid the Songhuajuang river pollution crisis in Jilin province of northern China earlier this decade.
'I was having dinner with a senior official of the municipality which was hit by the incident,' Dr Lan recalled. 'During the conversation, he enquired about my business and I explained that we were a biotechnology membrane solutions provider for the nutraceuticals businesses. He asked me if I could have a look at the water treatment plants in his municipality.'
And what he found surprised him. 'These treatment plants were essentially civil engineering EPC (engineering, procurement and construction) installations whose capacity and capability to provide continuous and consistent waste water treatment was limited,' he said.
The rest is history, as he put it.
'Water treatment cannot be approached as a purely civil engineering undertaking,' Dr Lan explained. 'It has to be an integrated technological process.'
Years of working with the pharmaceutical industry has enabled Sinomem to develop some of the most advanced membrane technologies available today. Its Bio-Cel bioreactor membrane is rated among the best worldwide and is currently being tested in Singapore for Newater recycling applicability.
The company has 19 municipal build-operate-transfer (BOT) projects in various parts of the water-scarce provinces in northern China, especially in Jilin. The current capacity of 300,000 tonnes per day will increase to 560,000 tonnes per day when all the plants come onstream.
These BOT projects come with 20 to 30 year concessions and minimum offtake guarantees of 80-90 per cent in the first two years of operation, rising to 100 per cent in the third year.
Going by the numbers, the future looks good for Sinomem.
Four-fifths of China's water resources are concentrated in the Yangtze Delta and southern China. To tackle this, the Chinese government diverts river water from the Yangtze River to the arid north. But these routes run through the populous and industrial provinces of Jiangsu, Shandong, Henan and Hubei, prompting the government to raise waste water treatment discharge standards and shut down polluting industries in these regions to ensure the quality of the diverted water. The government has already set aside some one trillion yuan (S$209.1 billion) to boost waste water treatment capacity under its current Five-year Plan.
For water players, getting the project is not the issue, Dr Lan added.
'The challenge is to make a sufficient margin. This is because the tariffs are fixed by the governments,' he explained.
He insisted that Sinomem has the technological capability to keep costs down.
Analysts agreed that the company is on a strong footing for stable cash flows ($23 million in cashflow during the first half) and recurring income for an extended period of time.
Having raised some $31 million via a placement of 50 million new shares at 62 cents a piece last week, Sinomem now has a net $45 million in its kitty, Dr Lan said - enough to push ahead for more BOT projects in water scarce northern China.
The company is now looking to boost income via the supply of treated and recycled discharged water to nearby industrial consumers.
'The water scarcity problem in the northern regions means there are opportunities for water purification and recycling as well,' Dr Lan said.
Sinomem's water business has recently replaced its traditional membrane process, and engineering and biochemical production business as the largest profit contributor. About 55 per cent of its 1H09 core profit of $10.6 million came from the water business.
Meanwhile, Dr Lan's profile in the scientific community - especially in China - remains high. He is currently an adjunct professor in the prestigious Peking University, Xiamen University, and NUS.
But he is more concerned with the branding of his company.
'Please inform your readers we are a Singaporean company with a solid presence in the water solution business in China,' he said. [/FONT]
</TD></TR></TBODY></TABLE>
