MEMSTAR: S-chip or Singapore brand?

The difference between Memstar and other water companies is that it is not an EPC or BOT player. Rather, it has very strong R&D and is one of the world's pioneers in membrane technology with invention patents, said its executive chairwoman Pan Shuhong. Above: Ms Pan with a membrane module at Memstar's Singapore International Water Week booth.
Photo by Sim Kih

MANY INVESTORS see Memstar as an S-chip because its two major shareholders are PRC-born technocrats and besides, more than half its revenue is from China.

Few, however, realize it was actually founded and headquartered in Singapore, with technology initially developed in Singapore.

The founder is Dr Ge Hailin, a well-known membrane research scientist whom EDB had recruited in 1992 from Australia.

The company’s executive chairwoman is Ms Pan Shuhong, who worked with Dr Ge when they were both at a unit of SPRING SINGAPORE (then known as PSB). Together, they hold about 50% in Memstar.

World-class membrane maker with important invention patents

Desalination plant at Senoko Power Plant in Singapore using Memstar's membrane system comprising of module trains. Photo from company.

This tiny bit of founding history, plus its position as one of the world’s pioneers in membrane technology and a world-leading PVDF hollow fibre membrane manufacturer with invention patents, explains why it has received grants from EDB for its research laboratories in Singapore.

"Not many companies have been able to successfully develop advanced membrane technology. That is why giants like Siemens and General Electric have chosen to take the M&A path rather than develop advanced membrane applications in-house," explained Ms Pan during an interview at the Singapore International Water Week 2011.

Memstar is a founding sponsor for the trade exhibition, where over 600 companies in the water sector put up exhibition booths.

GE unit GE Water & Process Technologies acquired ZENON Environmental, one of the global leaders in advanced membranes for water purification, wastewater treatment and water reuse, for about US$689 million in 2006.  According to Bloomberg, Zenon lost US$6.95 million in 2005. 

Similarly, Siemens Water Technologies was born through Siemens' acquisition in 2004 of the best brands in the water industry: Memcor, Envirex, Zimpro, Davis, Ionpure, etc.

Memstar's membrane bioreactor products are widely used for treatment of industrial and municipal wastewater and its continuous membrane filtration system is widely used to produce portable water from surface and ground water and seawater desalination.

Other than Singapore and China, it also has customer service offices in Indonesia, Malaysia, Taiwan and the USA, and its products are sold all over the world.

A Singapore brand

”Being headquartered in Singapore helps our international branding, because of its reputation in coming up with NEWATER, as an international water hub and in cleaning up the Singapore River,” said Ms Pan.

The company positions itself as a global player and plans to eventually have only 50% sales contribution from China. 

Ms Pan's alma mater, Jilin University, is famous for its chemistry faculty, but she eventually undertook marketing to commercialize her colleagues' innovations. Photo by Sim Kih

She sees huge market potential in China, as less than 2% of its wastewater treatment makes use of membrane technology, versus 40% in Singapore.

She believes that demand for technologically advanced products in the treatment of industrial and municipal wastewater will be boosted by the following trends.

(1) Increasingly stiff regulatory requirements: Regulatory indicators for treatment of drinking water in China is set to increase to 106 (from 36 previously) in Jul 2012.

(2) Success cases: More and more companies are successfully using MBR membrane technology for wastewater treatment, leading to a more widespread acceptance of the technology.

(3) Cost effectiveness: Compared to traditional methods, MBR membrane technology takes up only a small area, costs the same as traditional methods and is more efficient.

Foray into operations and maintenance

Memstar generated Rmb 77.6 million in revenues and Rmb 9.3 million in profit attributable to shareholders for the first three quarters of FY2011 (year end June).

70.9% of its 3Q2011 revenues were from the industrial segment (includes applications for larger domestic, commercial and industrial projects) while another 28.0% came from its investment in water treatment projects. The remaining 1.1% was sales of products for domestic and commercial use.

"We acquired two TOT water treatment projects for demonstration purposes to kick-start our foray into offering contract services for operating and maintaining membrane systems," said Ms Pan, who clarified that investment projects are not core business strategy.

Rather, it wants to concentrate on providing membrane systems and its component trains / skids and modules, and is foraying into operation and maintenance services.

Other than being used in water treatment plants, industrial applications for its products can be found in activities for water reclamation, seawater desalination, food, pharmaceuticals, chemical, power generation, petroleum, bio-separation.

Domestic and commercial applications include membrane water purifiers or integrated water purifying systems for households, commercial buildings, small businesses, hotels, schools, hospitals, etc.

Corporate governance

”We are a very disciplined organization, with a work culture from PSB,” said Ms Pan who is Singaporean.

Likewise, Memstar’s senior management comprises of Singaporean technocrats, mostly China-born.

"There are company policies and there is the implementation. Corporate culture is important where governance is concerned.

”Our vision to be a world-leading membrane technology player determines our technology and community ideals, and so we do not embark on a project simply because of money-making motives,” she added.