Tri-Tech Holdings (TRIT) Posts Big Growth, But Shy Of EPS Estimate & Weak Guidance

Tri-Tech Holdings (TRIT), a China water pollution play, posted big quarter over quarter growth this morning, but the EPS was a hair shy of the analyst estimate and revenue guidance for 2010 was below expectations as well.  The company reported an EPS of .28/share (vs the estimate for .29/share) on revenues of $16.9 million (vs the estimate of $13.6 million).  That’s good for a 40% quarter over quarter jump in EPS and a 245% jump in revenue.  Looking ahead, the company is forecasting revenue of $40.6 million for 2010, but that’s shy of the $46.2 million predicted by analysts, so the stock is selling off more than 15%.

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The CEO commented on the importance of winning their largest project in the City of Ordos:

“Winning this project has opened the doors for us to pursue new opportunities in the municipal drinking water treatment markets. The growth in this market is driven by the Chinese national standards for drinking water promulgated in 2006. These standards are designed to improve drinking water safety for nearly 1.4 billion people. In order for the entire country to fully comply with the new standards by a July 1, 2012 deadline, China must protect and improve the quality of source water through reclamation of wastewater and reduction of pollutants discharged or percolated to the natural water bodies and apply the most advanced technologies, such as membrane technology, disinfection and on-line monitoring technologies, to upgrade, retrofit or replace existing treatment facilities that use traditional technologies. We expect more business opportunities in this sector.”

In my opinion, the sell off following this earnings reports offers an opportunity to get in for the long haul at some point.  It’s never a good idea to jump into a big downward move right away, but once the stock stabilizes, it will offer a nice entry point.  This was a solid quarter out of a company who will benefit big time from the need for clean drinking water in China.

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