They took a leap of faith to establish their own water management company, growing it into an SGX-listed firm over 30 years

 

Memiontec managing director Dewi Kwek and executive director and chief executive Tay Kiat Seng are focusing on five pillars to further grow the company. 

 

Theirs is a story of a marriage made in heaven evolving into a partnership that prospered from a passion for growth and transformation.

 

When husband-and-wife team Tay Kiat Seng and Dewi Kwek founded water and wastewater treatment firm Memiontec with their savings in 1992, they swapped stable jobs in well-established companies in the industry for a small office in Balestier. 

 

In the early years, they shared just one table, fax machine and telephone. He is Memiontec&rsquo s executive director and chief executive, and she is its managing director. 

 

&ldquo We wanted to be entrepreneurs and liked the challenge of creating something of our own,&rdquo says Mr Tay, 60, who met Ms Kwek, 56, in 1988. They were working at the same company in Australia then. 

 

Their leap of faith paid off. Over 30 years, the couple, who have two children together, built Memiontec into a regional powerhouse with about 240 employees and subsidiaries in Indonesia and China.

 

The company, which listed on the Singapore Exchange&rsquo s Catalist board in 2020, is worth $132 million. Last year it clinched its largest contract, worth $56.6 million, to install equipment for the Changi Water Reclamation Plant, and started its third expansion overseas, to Vietnam. 

 

Along the way, it has diversified its business to add revenue streams, used different strategies to succeed in each market, and continued to learn from others to enhance its plans for the future. 

 

Ms Kwek shares: &ldquo You have to be open to change and embrace transformation if you want to grow. We want to hit $500 million in market capitalisation by 2026 and expand Memiontec into a multinational corporation that flies the Singapore flag everywhere.&rdquo

 

The company spent its initial years winning local contracts to develop a track record, as well as earning licences to bid for larger projects in the public sector.

 

After six years, it started to look abroad. &ldquo Singapore is very small, and the opportunities are greater in bigger countries,&rdquo says Ms Kwek.

 

Indonesia was a natural target, with its rapidly growing population and industries that need clean water. The country has over 270 million people (47 times the size of Singapore&rsquo s population) &ndash a figure that could grow to more than 290 million by 2030, according to World Bank estimates.

 

It is also where Ms Kwek, who is now a Singapore permanent resident, grew up. Armed with her knowledge of Indonesia&rsquo s business landscape, the firm focused on multinational companies operating in Indonesia, especially those in the pharmaceutical sector.

 

&ldquo Foreign businesses value Singapore&rsquo s reputation in water treatment, and the pharmaceutical sector needs not just clean but ultra-pure water. This is our forte. We had fewer competitors in Indonesia in this.&rdquo

 

By the numbers

 

36.4%

Memiontec&rsquo s increase in profit ($8.6 million) in the last financial year with the help of overseas contracts

 

Up to 50 years

Memiontec could generate 25 to 50 years of recurring income with Build-Own-Operate-Transfer and Transfer-Own-Operate-Transfer projects

 

$500m

Memiontec&rsquo s market capitalisation goal for 2026, up from $132 million currently

Memiontec incorporated subsidiaries in Indonesia in 2004 and continued to increase its list of customers there. Today, clients in Indonesia make up 60.7 per cent of the company&rsquo s revenue.

 

In 2009, an opportunity came calling in China. Memiontec received an order from an electronics firm to build a water and wastewater treatment plant in Wuxi.

 

Mr Tay recalls: &ldquo We built the plant and handled its maintenance, so we had a foothold there. Later, when we saw that many electronics and semiconductor firms were moving to China to lower their costs, we quickly formed a subsidiary in Chengdu in 2015 to tap on this market."

 

Diversifying revenue streams

 

Even as Memiontec grew its business in Singapore, China and Indonesia, it searched for ways to expand. Since its founding, it had specialised in engineering, procurement and construction (EPC) projects &ndash essentially, designing and building systems and plants, and then handing them over to the customer.

 

In 2016, it moved into Build-Own-Operate-Transfer (BOOT) and Transfer-Own-Operate-Transfer (TOOT) projects, taking on the additional roles of financing, operating and maintaining plants and selling their treated water. With Enterprise Singapore&rsquo s (EnterpriseSG) support, it partnered firms in Indonesia to get such projects off the ground.

 

&ldquo With EPC projects, you finish them and get paid, and that&rsquo s it. With BOOT and TOOT projects, you get more and recurring income streams from the extra work. The concession periods to manage the plants and sell the water can be up to 25 or even 50 years. It&rsquo s a much more stable revenue (stream) for the company,&rdquo Mr Tay says.

 

&ldquo With all the experience that we accumulated through our EPC projects, we knew we could do a good job.&rdquo

 

After successfully listing in Singapore, it joined EnterpriseSG&rsquo s Scale-Up programme in 2021. The 12- to 18-month programme helps high-potential local firms accelerate their growth and expand globally.

 

Executives from the firms work with local and international consultancies to create and fine-tune growth strategies, and network with other local business leaders.

 

&ldquo You get advice from experts who have your best interests at heart. We were very excited about that. We want to make use of every chance we can get to open up our lead over our competitors.&rdquo

 

With the consultants&rsquo input, Memiontec has crafted a growth plan with five pillars for the next few years. These include securing more BOOT and TOOT projects and partnerships with firms in Indonesia to upgrade from industrial and commercial projects to bigger, municipal projects.

 

One of its growth pillars is also to venture into more markets, such as Vietnam.

 

Mr Tay notes that Vietnam has about 300 operational industrial zones. Each contains many different sectors that require water and wastewater treatment services. This makes it a top priority for the company, which was why it set up a subsidiary in the country last October.

 

EnterpriseSG&rsquo s overseas centre in Vietnam is also helping by connecting Memiontec with local water treatment firms. The company plans to enter into joint ventures with some businesses and acquire others to expand its presence quickly and get ahead of potential rivals in the country.

 

&ldquo We&rsquo re being more aggressive now than we were in China and Indonesia, but that&rsquo s because we&rsquo re a larger company now with more resources. You adopt different strategies when you&rsquo re at a different growth stage,&rdquo says Ms Kwek.

 

We&rsquo re being more aggressive now than we were in China and Indonesia, but that&rsquo s because we&rsquo re a larger company now with more resources. You adopt different strategies when you&rsquo re at a different growth stage.

 

Both Mr Tay and Ms Kwek are confident that Memiontec is on track to achieve its $500 million goal in the next three years, given that it became more profitable last year. He says with a laugh: &ldquo After that, it might be time to start thinking about $1 billion."

 

Maximising talent for growth

 

For businesses to succeed, recruiting and retaining the right talent is crucial, says Memiontec executive director and chief executive Tay Kiat Seng.

 

After attending Enterprise Singapore&rsquo s Scale-Up Programme and getting insights from local and international consultancies, Mr Tay has introduced detailed key performance indicators to identify high-achieving staff, such as tracking sales employees&rsquo numbers of quotations and purchase orders.

 

&ldquo We have a much better system now, and we can also tell which department is more capable and cohesive,&rdquo he adds.

 

He notes that companies must have clear strategies to improve their operations and fuel their growth. &ldquo If you want to go overseas, you must learn the culture, find local partners and build local teams. Get help if you need it. With our expansion to Vietnam, EnterpriseSG&rsquo s contacts have been invaluable.&rdquo

 

&ldquo You can reach out to other Singaporean businesses that have made the journey and learn from them too. There&rsquo s no need to do it alone.&rdquo

 

Memiontec&rsquo s chief executive Tay Kiat Seng said the group is looking to hit a market capitalisation of S$500 million by 2026. 

 

WATER treatment company Memiontec : TWL +9.38%had a rough start as a listed company, launching its initial public offering (IPO) on the Singapore Exchange in February 2020 &ndash just as the Covid-19 pandemic was unravelling.

 

In a recent interview with The Business Times, Memiontec&rsquo s chief executive Tay Kiat Seng recalled how the company had to cut its public float and settle for a lower price-to-earnings ratio because of poor market conditions and cautious investor sentiment. The group had also been hoping for a public float of 20 to 25 per cent, but was forced to trim this to 17 to 20 per cent.

 

Tay said the company &ldquo bit the bullet&rdquo and forged ahead with the listing anyway. But its problems did not end there, as the company&rsquo s order book and demand for its offerings were hit.

 

Although Memiontec was classified as an &ldquo essential&rdquo service in Singapore and operations were largely uninterrupted during the pandemic, Tay said the company&rsquo s order book would have been stronger if not for the pandemic. Margins and earnings would have been better too, he added, as the pandemic brought about a slew of problems, including higher costs and labour shortages.

 

More than two years after the company&rsquo s listing, with the pandemic&rsquo s effects gradually unwinding, Tay is hoping to catch a second wind.

 

Tay said he has specific plans to grow Memiontec. &ldquo We have a clear, concise business strategy that was developed together with global consulting firm McKinsey,&rdquo he said, adding that Memiontec is also exploring various fundraising opportunities using bonds, convertibles or share placements for its projects.

 

Diversified player

Memiontec has close to 30 years of experience in water and wastewater management services in Singapore, Indonesia and China. The company began with TSEPC (total solutions with engineering, procurement and construction) projects, but Tay said the income from these projects was often &ldquo lumpy&rdquo in nature &ndash meaning the group would only earn revenue on a per-project basis. 

 

In search of recurring revenue streams, the group diversified into other areas. 

 

To TSEPC, Memiontec has added three other segments: the operation, maintenance and service (OMS) of water treatment plants the sale, distribution and trading of water treatment systems and what it calls &ldquo sales of water&rdquo , which comprises build-operate-own-transfer and transfer-operate-own-transfer projects in Indonesia. 

 

For transfer-operate-own-transfer projects, existing water treatment plants &ndash along with ownership and operational rights &ndash are transferred to Memiontec for up to 20 years. The asset is then transferred back to the owner, usually a government. 

 

For build-operate-own-transfer projects, Memiontec is in charge of the construction of new water treatment plants. The ownership and operational rights are left to Memiontec for up to 25 years before being transferred to a new asset owner. 

 

For the first half of 2022 ended June, Memiontec reported earnings of S$1.1 million &ndash more than double the S$0.5 million in the corresponding year-ago period. This increase came despite a 39.8 per cent decline in revenue to S$16.2 million, and was attributed to higher margins from its TSEPC projects in Indonesia. 

 

As at end-June, the group&rsquo s order book stood at S$121 million. The majority of these projects are expected to be substantially completed within the next two years.

 

Tay said demand for Memiontec&rsquo s services is expected to grow as countries such as Singapore and Indonesia continue to invest in water security and access to clean water.

 

Revised growth pillars, strategy

Memiontec&rsquo s revised strategy will see the group making strategic investments for recurring income in the sales of water segment, Tay said.

 

The company also has its eye on new markets, among them Vietnam. Tay reckons Vietnam will be a &ldquo big market&rdquo for the group, and said the company will look at merger and acquisition opportunities there.

 

&ldquo (Memiontec) is looking at Vietnam to acquire some build-operate-own-transfer projects, or to start work with some agents to do some of these projects,&rdquo he said.

 

Memiontec will also scale up project sizes and increase its footprints in Singapore and Indonesia, even as it looks to cut its overhead costs in Singapore. The company will also strengthen its sales distribution network in China, and identify and work with distributors in the region.

 

Tay believes Memiontec&rsquo s advantage over its competitors lies in the company&rsquo s presence along the entire value chain. While other companies can usually only provide solutions for water or wastewater, Tay added, Memiontec can do both. 

 

In Vietnam, for instance, Tay noted that many companies in the water treatment industry do not have the relevant technology to convert seawater into drinking water. Such gaps in markets present opportunities for Memiontec, he said. 

 

Although the economic environment is currently laced with uncertainty on the back of higher interest rates and rising inflation, Tay said he is confident that the demand for water treatment solutions will be strong in the near to mid term. The company will, however, remain &ldquo prudent&rdquo and not overspend on activities like hiring, he added.