Tri-Tech Holdings (TRIT) Earnings/Sales Double, Shares Soar

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09:06:14 am on March 25, 2010

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Tri-Tech Holdings (TRIT) is a very small company, but one that is growing quickly in an industry with tremendous opportunity – China water.  The company reported revenues that doubled over the year ago quarter to $5.9 million and an EPS of .24/share vs the .12/share reported a year ago.  Gross margins increased to 38% from the 27% in the year ago quarter.  So, clearly a company hitting on all cylinders right now and the future looks great.  Keep TRIT on your radar.

Some interesting comments from CEO Warren Zhao.  I don’t usually post all the comments from a press release in an earnings report, but feel all the comments about the business were important, so have included all the CEO commentary: “We are currently pursuing smaller river basin flood monitoring and forecasting systems and groundwater monitoring systems across the country. In 2009, we received awards for five projects for smaller river basin flood and forecasting systems. … We are promoting our proprietary products targeting the water monitoring and dispatching systems of the Northward Rerouting of Southern River engineering construction. We believe that the entire Northward Rerouting of Southern River engineering project has a market potential of approximately $43.5 million.

“In 2009, the Chinese government launched the 103 Pilot-County Mountain Torrent Forecast Plan. Accordingly, the government allocated approximately $29 million to fund these projects to deal with frequent mountain torrents devastation. During the year, we won the bids for 14 of these pilot projects, which was in line with our internal expectations on the bid win rate.

“At present, our wastewater treatment business is focused on Tianjin City and Hebei Province. In 2009, we won 26 contracts from this targeted wastewater treatment market, including pump stations, treatment plants, odor control systems, automatic controls and instruments.

“We are actively pursuing opportunities in the industrial wastewater and process tail gas treatment markets in the oil and gas industry and the petrochemical industry such as SINOPEC and PetroChina. Additionally, we intend to strengthen our industrial pollution control services by penetrating adjacent industry verticals such as the power generation industry.

“Currently almost all newly-designed sewage treatment plants have odorous gas containment and control requirements. Therefore, we expect an increase in the sales of our proprietary bio-filtration odor control systems.

“In our municipal wastewater business, we plan to expand our target market. In our current business footprint in only Hebei and Tianjin, the government is building 80 new wastewater treatment plants. We believe significant opportunities exist in 32 other provinces, municipalities and autonomous regions in China.

“We intend to expand our role from sub-contractor to prime-contractor. Since inception, we have grown from a provider of system controls to a company capable of managing the whole installation of municipal water and wastewater facilities. As we continue to grow, we will focus our business on more complex installation projects.

“We also intend to further develop our water resource management services from partial management solutions to full management of large-scale river basin projects. We believe the Chinese government’s allocation of significant investment offers us huge business opportunities.

“In addition to organic growth, we are targeting selected acquisitions. In general, our markets are highly fragmented with small competitors. We will consider acquiring companies that we believe will add significant value to our business. These targets may have strong customer relationships but limited market reach, or may possess specialized skills but the businesses have not scaled up. When evaluating targets, we use a disciplined, conservative approach to ensure the acquisitions are strategic and accretive,” Zhao said.

Shares of TRIT are up nearly 20% today, pushing above resistance of the 50 day moving average with huge volume.  Looks like we’ll get record volume today. 

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