Tritech_marble_VoyagepictureTriTech has begun extracting marble from Hill 2B in Kelantan, Malaysia. Photo: Voyage ResearchSOME 2-3 years ago, TriTech Group started to build up two new core businesses to establish a robust foundation for its growth.

But that meant it had to incur extra costs, which contributed to FY13 (ended March 2013) being loss-making. Even the most recent reporting period -- 1HFY14 -- was still loss-making.

But TriTech is poised for better times as the greenfield projects have reached the critical milestone beyond which they can contribute to its topline and bottomline.

TriTech said as much in its 8 Nov 2013 statement which unveiled a loss of $1.9 million for 1HFY14 -- ie, it is "optimistic of the performance of the Group for the next 12 months." 

To begin with, TriTech's original core engineering business has consistently been profitable, generating cashflow that has helped support its investment in the new businesses.

(TriTech has also raised $15 m by issuing convertible bonds and $18 million by issuing new shares to support its marble resource business and water-related business, respectively.)

marblesite1.14View from atop the marble site. The marble is extracted from the top and brought down by road. No blasting is employed.
Photo: annual report
The marble resource business will be spun off in the coming months on Catalist. The IPO intent was first announced by TriTech in Sept 2012 and TriTech has since incurred $1.78 million in professional fees for the IPO.

Operationally, at its marble site in Kelantan, Malaysia, TriTech has built a winding road to the top, started producing dimensional stones and set up a slab-cutting plant as well as limestone aggregate and powder plants to enhance the value of the extracted resources.

In Oct 2013, TriTech announced that it had secured S$18 million worth of sales contracts to deliver marble to property development projects in China, which are expected to contribute revenue in 2H of calendar year 2014.

TriTech is targeting customers not only in China but also Southeast Asia and the Middle East. 

Massive plant producing membrane-related products

TriTech's core engineering business specializes in geotechnical, ground and structural engineering services -- and has more than 50% market share by its own estimate.

Virtually all the revenue is derived from Singapore-based projects for mainly public sector customers such as JTC Corporation, Land Transport Authority, Public Utilities Board, and the Urban Redevelopment Authority.

Its order book stood at S$83 million, according to a Voyage Research report dated 27 Nov 2013. 

jeffreywang_tritech1.14Dr Jeffrey Wang Xiaoning, MD of TriTech Group at his office in Kaki Bukit. He holds a PhD from the Chinese Academy of Sciences (where he was awarded the Minister Award of Chinese Academy of Sciences for outstanding performance) and a PhD from the National University of Singapore. Photo by Leong Chan TeikThe engineering capabilities of TriTech formed the foundation for its venture into a new core business over in Qingdao, China. 

TriTech completed the construction, in July 2013, of what it describes as one of the biggest water-treatment membrane production centres in Asia.

Occupying 36,000 sq m of land (equivalent to 5 football fields) and boasting 49,000 sq m of built-up area, the centre produces a wide range of membranes and membrane-related products, said Dr Jeffrey Wang, MD of TriTech in a meeting with NextInsight last week.

The centre will:

• Manufacture membranes for water treatment and desalination systems, portable small-to-medium scale desalinators;
 
• Produce bottled drinking water and dispensers; and market related technologies, systems and services;
 
• Supply water-quality monitoring products and services.
 
Notably, automated real-time monitoring and surveillance of water quality is an area of expertise that Tritech has demonstrated in Singapore where it has deployed about 300 water quality surveillance equipment across the country.

As Dr Wang said, TriTech is combining its core engineering capabilities -- including electrical engineering, sensors and automation -- with its membrane technology to offer one-stop solutions to customers.

The solutions will be in great demand in China where environmental pollution has become a worrying matter and where more clean water is needed to meet the needs of the population.


qingdao_plant1.14Covering land area equivalent to 5 football fields, TriTech's production centre in Qingdao, China was completed in July 2013. It produces a comprehensive range of membranes and membrane-related products. Image: annual report

TriTech also has just completed the acquisition of a Chinese water treatment company, Anhui Clean Environment Biotechnology Co. Ltd. in China, for RMB10 million.

Anhui is one of the top 3 players in the industrial water treatment sector, possessing  a wide range of licenses, including a Class A Design License for environmental projects in China with unlimited tender capacity, and a Class A Design License for  industrial waste water treatment in China with unlimited tender capacity.

This paves the way for TriTech's products to be used in China projects and for TriTech to, overnight, become a player in the water industry in China.

As Dr Wang said: "TriTech has ventured into the water business, and due the our complete range of products and our expertise in water treatment projects, especially in industrial waste water treatment, TriTech is different from any other water business companies."

Combined with its new business of supplying high-quality marble from Kelantan to the region, TriTech has three pillars of strength and its performance could increasingly catch the eye of investors. 
 

Recent story: TRITECH'S 'huge price-value gap', YANGZIJIANG'S order momentum to continue
 

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  • Lionel Lim