Written by Leong Chan Teik     
Published: 18 July 2016

 

A CONTRACT CLINCHED by TriTech Group in June 2016 gives a good sense of the capabilities of the company.

The contract awarded by the Land Transport Authority (LTA) to TriTech' s wholly-owned subsidiary, Tritech Consultants, amounted to S$36.6 million. (We understand that this was not the lowest bid).

TriTech is to provide Qualified Person Services which, in simple terms, means it acts as a project manager which will assess the completed work of contractors. Only if TriTech endorses the work to be in accordance with contractual specifications will the LTA issue payment to the contractors. 

TriTech will provide its services for contracts T313 and T315 which are the construction of, respectively, part of the Thomson-East Coast MRT Line and new infrastructure adjacent to the existing Tanah Merah MRT station.

TriTech' s services will span eight years starting from June 2016, translating into revenue of about S$4.6 million a year on average.

Considering that the work is consultancy in nature, the expenses will largely be manpower costs. There' s likely to be a decent profit margin.

The LTA and other government agencies have been TriTech' s key customers all these years, making up 99% of its engineering revenue -- another fact that reflects well on TriTech' s engineering capabilities which span a wide range.

This core business has an order book of S$144 million as at end-June 2016. Purely Singapore-based, this business faces limitations for major growth, though, said its MD, Dr Jeffrey Wang.

He emphasised in an investor briefing recently that the company' s future growth will instead largely come from a business segment that it has spent the past couple of years investing in and expanding -- the water and environment solutions business.

Some six years after it started to diversify, TriTech has " built a complete platform to supply one-stop solutions for water and environmental problems" . It has the potential to become bigger than TriTech' s current core engineering business, said Dr Wang.

TriTech recently completed a restructuring exercise leading to six subsidiaries becoming wholly-owned by TriTech Environmental Group which, in turn is 100% owned by TriTech Group.

Two subsidiaries are in Singapore and four in China, with three key areas of technical competence -- advanced membrane products, anaerobic industrial waste water treatment, and real-time water quality and environment monitoring. 

Put another way, TriTech Environmental can manufacture membranes, integrate them into a system, and provide EPC (engineering, procurement and construction) services.  " We are not just a contractor or a supplier -- we offer one-stop solutions. Tritech is different from any other water business companies."

And, as Dr Wang said, TriTech' s advanced membranes are more cost-effective than international branded ones.

With its membrane solutions, TriTech is focused on treating medium- to highly-polluted industrial water.

Beyond this, TriTech is taking its homegrown and established capability in monitoring water quality in outdoor water bodies to China.  The market demand for that is potentially enormous.

The massive consumer market is also on TriTech' s ambition list. It has a business that produces bottled alkaline water for the consumer in Singapore and China as well as alkaline water dispensers in China.

" I' m very positive about the future of our water and environmental business in China. In the past two years, the Chinese government has become stricter about environmental issues. It offers us very great market prospects," said Dr Wang. " There' s not lack of jobs but we have to choose carefully."

According to TriTech' s FY2016 annual report, its environmental group had a S$21 million orderbook (see below).

&diams Targeting sponge city projects in China via JV

" Over the coming 12 months, we envisage an increase in our order book which currently stands at $21 million. In line with our strategy to identify opportunities that could raise the growth potential of our Water-related and Environmental business, the Group entered into a joint venture agreement with China Finance Asset Management Co. Ltd. (&ldquo CFAMC&rdquo ) in January 2016 for the purposes of securing &ldquo Sponge City&rdquo and &ldquo Smart Waterworks&rdquo projects in the PRC.

" There are 16 cities across the PRC that have been designated as &ldquo Sponge Cities&rdquo in a pilot scheme aimed at harvesting more rain water. These sponge cities are to effectively absorb, filter, collect and use rainfall. In view of this major development, we intend to work on securing contracts to provide services in rainwater conservancy, storage, treatment and reclamation. We also plan to increase the penetration of our water and environmental monitoring and management services in the PRC.

" As part of the joint venture agreement, CFAMC and Tritech will hold a 70% and 30% stake respectively in the joint venture company. CFAMC will be in charge of marketing and financing of the projects secured under the joint venture company while Tritech will be responsible for the technical aspects in relation to the execution and maintenance of the secured projects."

-- Dr Jeffrey Wang, in TriTech' s FY2016 annual report