Tri-Tech Holding (TRIT) Beats, Reaffirms Guidance

Tri-Tech Holding (TRIT), a top China water play, reported a Q2 EPS of $0.19, 6 cents better than the analyst estimate of $0.13 this morning. Revenue for the quarter was $8.1 million, which compares to the estimate of $7.02 million.  That’s a revenue surge of 161% over the year ago quarter and a 19% improvement on the EPS side.  Given the big ramp in revenue, I’d like to see TRIT reported a stronger EPS number, but still a good quarter from a company that I believe is close to the end of a long correction.  Looking ahead, the company is reaffirming 2010 revenue guidance of $40.6 – $50.5 million.

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CEO Warren Zhao commented on the quarter: “Strong results from our Water/Wastewater Treatment and Municipal Infrastructure, Water Resources, Management Systems and Engineering Services and our newly formed Industrial Pollution Control and Safety business segments have provided a solid foundation toward meeting our performance expectations for the year. We have a large pipeline of projects as well as increasing opportunities for new business.

He further commented on the opportunities in China due to increasing shortages of fresh water: “The potential going forward is quite large. For instance, we have also identified $35 million in project leads within the provinces that we recently expanded. But, in fact, we expect to secure significant contracts in all of our newly expanded provinces in 2010. Due to a shortage of fresh water sources, the Chinese government now requires all new power plants in coastal areas to build seawater desalination plants to provide the process water to operate the power plants as well as provide water for adjacent commercial and residential users. As a result, the seawater desalination market is growing rapidly, especially in the Bohai Bay Area that is surrounded by the major cities of Tianjin, Tangshan, Dalian and Qinhuangdao. By the end of 2010, the total capacity of sea water desalination will increase to 500,000 cubic meters per day or 150 million cubic meters a year, becoming the largest sea water desalination industrial base in China. We expect to participate in this potential market by leveraging our existing technologies in water treatment.

Shares of TRIT are trading about flat today and recently showing signs of stabilizing around the 50 day moving average.  A firm break off this level of support offers an outstanding entry signal and may signal it’s ready to begin moving up again after a long correction.

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