FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » PC House and the Global PC industry

PC House and the Global PC industry

Go to page : 1, 2, 3  Next

Go down  Message [Page 1 of 3]

1PC House and the Global PC industry Empty PC House and the Global PC industry Wed Feb 20, 2013 9:24 pm

lion


Senior Equity Analytic
Senior Equity Analytic
I have some doubts on PCH,

1. Does the marker price reflect the true future earnings?

2. The company's core revenue is from the retail sales of Personal Computers, the industry is not is the best shape right now in the global context. Major PC manufactures like DELL, HP have reported declining revenues and earning from PC business.
http://www.bloomberg.com/news/2012-11-15/death-be-not-proud-as-dell-to-hewlett-packard-show-pc-end-tech.html

3.The trend is shifting towards to smartphones and tablets from PC, we cannot expect the business growth to correlate with the GDP growth as I think the PC industry will contract in the next couple of years.

Does anyone in the forum think PCH is attractive at current price?(the lowest price since IPO, and trading below the BV)

2PC House and the Global PC industry Empty Re: PC House and the Global PC industry Wed Feb 20, 2013 9:50 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Reminding me Vanik saga.

3PC House and the Global PC industry Empty Re: PC House and the Global PC industry Wed Feb 20, 2013 10:19 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
ICT industry in the country have been thought to grow significantly than we think in the years to come. What we dont see is that many youths are taking ICT related exams and make themselves engaged in computer courses at large.
Therefore, a market should be there for these individuals to find jobs. Globally even there's demand for ICT professionals, I emphasize, ICT professionals.

Now, with PCH, the problem is, eventhough they moved towards the notebook market with the opening of 7to7 (or a similar name), I dont see they keep up their customers satisfied. They might be thinking PC market is the only future and a penetration is needed. Their foresight seems to have blinded. Majority in urban areas moving towards notebooks cuz of simplicity. On the otherhand, its an electricity saving too.

As lion said, smartphones, tablets, taking over the country by surprise.

My opinion is that, PC market will slowly decline and a new market will be opened for all the new gadgematics to come. And the companies who opens their doors for the evolving technology will be winners. However, I failed to see PCH portraying their image in the new era if the current thinking pattern would not changed.

4PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 8:19 am

speculater

speculater
Senior Equity Analytic
Senior Equity Analytic
Can any one tell me is this the reason massive reduction in revenue? It is 43% reduction ( around 1.26 Billion). This is very significant amount.

even after considering all these issues it cannot be this much reduction. I feel something else happening but no idea. Something fishy.

Anyone can please explain this? is this genuine revenue reduction or previous revenue is manipulated? Or PCH is dying?????????

5PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 8:22 am

seek


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
A shop owned by PCH in Unit Plaza is now selling clothes. Smile

6PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 8:46 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
The current plight of PC house is not strange or unexpected outcome for many of us. We cannot declare this was the definite state for that company but most of us suspected something like this would happen due to many reasons.

At this moment I did some unorthodox writing or analyzing to explain some significant facts, not about the particular company, but related to many similar kinds of companies engaged in the same business: computer hardware trading. .

The initial business model of all these companies was very simple: bringing computer parts from the countries like Singapore, assembling and selling them with a profit.

If you try to identify how they blossomed in the initial stages and what happened next you may find many similarities in most of these computer companies.

Actually these companies we talk were not established by any big firms in a big way to enter into this business.

About 25 years ago, there were few young individuals who came aware of the opportunities available in this field , mostly by chance, started hand carrying of computer parts from Singapore and selling here. Most of them were school leavers, set to this business after doing several odd jobs here and there.

We should go back to late 1980s to start this story.
One of the foremost of computer hardware business was one Jagath Ranawaka , a self studied computer enthusiast, with a good family background. He started a Limited Liability company called Jagath Robotics.
From mid of 1980s they supplied machines and services to Government Departments. I think they expanded opening some branches but later-on confined their presence to Colombo. They are still in software business at manageable capacity without much publicity.

Then, one Krishan , a boy recruited by Jagath RL who got the chance to visit Singapore for several times for his company while working here in marketing side. After learning everything about this mostly unknown bargain business he started a separate company with an educated chap called Ravi. (… I think, Kishan’s farther , Mr. Theodore worked in Irrigation Dept. and JRL supplied machines to them.... ) (I think this Ravi was then unknown Raigam owner – Dr. Ravi Liyanage) They registered a company named Kobian and supplied lot of computers to various Govt. institutes under the same brand name (Kobian) at healthy margins . Actually Kobian was the name of a shop in Singapore, Jagath RL and K. used to buy computer parts .

Then we see boys such as R. Gamini, Nilu, Janaka, Sanjiva , Wije etc. joined to this lucrative business. At the initial years all of them followed the same model and same routine. Fly to Singapore , stay 1-2 nights in a small room, go to Sim Lim Tower, find cheaper places to collect parts, hand carry the goods to Colombo and sell here with a good profit. If they buy a hard disk for 4000/- they sold it here at least at 7-8000/-. The profit margin of these initial players was over 80 – 100 % because assembling hardware and installation of software was an alien thing for almost everybody in SL .

Most of the chaps joined later in this list were actually the “Golayas” of senior players. Some were hired by some small companies for transporting goods from SIN to CMB by air. It was a risky setup. When you use a golaya to carry your stuff he quickly learn the secrets and places, starts his own business after few visits !.

Most of them used same room to stay in Singapore sharing same mat and pillow.
Actually some people who later became well known in the circle joined the group by accident.
One poor fellow ( name withheld) marooned in SIN after failed job attempt , given shelter of that ‘room’ by others. As a support, he was given chance to fly back to CMB carrying computer parts of some other guy who was in the game. As this innocent looking guy did it nicely he hired him several times. When they go to the suppliers at Sim Lim the new man was introduced to the Singaporeans as his partner. That boy did his job nicely for few months. Suddenly he disappeared and never came to that room again.

Few months later the senior guy found him Colombo, when he visited a big computer shop in Unity Plaza . Then he realized his lost golaya is the owner of that shop ! (when the cashier girl called him ‘Sir’.) By then, ‘golaya’ was hiring some other ‘golayas’ to carry parts for him from Singapore !.

At that time knowledge of hardware was rare and no one tried to even to open the CPU. Hence, this business was lucrative and most of these guys were able to earn lot of money, recruit staff , start companies and establish business places in Sri lanka. Supplying to the Govt. was very profitable even after paying commission to the officials.

Janaka (Ratnayaka) started a place called Computer Island. Sanjiwa (became Sanjiva Ayiya) who used to visit Neat Computers in Singapore to buy parts started a business in the same name, just like local Kobians did. Sanjiwa, a Sinhala man, later gave jobs to many youths and became a pillar in the industry now dominated by Muslims.

We also can find Naleem of Barclays and many others joining to this business. Naleem is still maintaining his reputation and satisfied within his limits. He did not try to expand his business to vulnerable levels like others.

Rishan of PC House is actually a young fellow joined at secondary stages of this hand carry business by watching at others progress. Not like for earlier guys I suspect he was given support by some big financial source because he joined the game when others starting to feel the lowering profit margins of the game.

All of these boys made lot of money at initial stages due to the situation prevailed at that time. Subsequently profit margin was reduced due to competition. Some people started importing bulk from manufacturing plants in Malaysia and Thailand.

Some of them went into troubles by believing they can grow and beat others if they expand and established bigger companies island wide. I think they had no idea about risk involved in expansion.

Present situation.

Now we see the bigger PC house created by Rishan did not produced expected prosperity compared to smaller PCH.
Sanjiwa of Neat also performed well and then saw upside down parabola in his graph. That boy , Janaka who created an island of computers was appointed ( surprisingly) as the head of a big financial institute because of the political work he has done. (SMS broadcasting from his servers in 2010) I think all who are in finance sector know his story better than me. They say, at present no one can trace him. ( Google and see the story if you have no idea about Janaka Ratnayaka.)

Nilu Wijedasa, Gamini and Kobian Kishan and many others soon realized the business is not that lucrative anymore, ventured into other fields. In those ventures also some succeeded some failed due to same reasons I mention below.

Jagath Ranawaka , the owner of JRL is still there as he controlled his desire for bigger expansions at the right time.
So is Naleem of Barclays , a simple down to earth person , still doing well at 1st floor of Unity Plaza and in his own building closer to Bamba Police. He did not excavate the well too deeper, knew the banks will collapse on him if dig too much. I think he knew the ground condition better than anyone and as a human being possess the ability to manage desires and greed for show.

Analysis

If we understand the overall picture of these companies and their leaders we can see they were smart guys used the opportunity created at that time to make their fortune.
In the process they had to use many tricks such as buying ‘almost new’ used parts from the 7th floor of Sim Lim, giving commissions to officials who were in purchasing committees, paying ransom to customs, over clocking, over pricing etc.

When you expand the business and made it public you cannot rely on all these things. Furthermore we can see these boys were from similar educational background, learnt the business by practice, have had no time to developed any academic and professional expertise.

Naturally these kinds of people always develop ego and overconfidence about their abilities and always tend to extrapolate blindly.
It is natural to think nothing will go wrong because they have enough experience in particular field than any other in the country.

Actually during their lifetime in the industry they miss and ignore the learning most of the very important aspects of business management. They are not like the boys or girls who join as executive trainees to the places like JKH , Hailey or SAMP who get step by step exposure and professional education in parallel and climb up towards CEO’s seat.

Although they performed at one stage due to born talents and temporary opportunities prevailed, they are not guarded by the shield of wisdom of real exposure to the business world. They were in the company of similar level of crowd for many years while those who spend their youth in reputed places meddle with CIMA or CIM devotees.

Unfortunately, they were the bosses from the beginning.

These limitations are hidden until they keep their work within their capacity.

When they expand, the setup becomes too big to handle and troubles start. In most of these places you cannot find enough professionals recruited to top positions. They always try to run with the people who make the venture successful during the progressive years.


Conclusion:

I do not write anything here. The reader can do it his own .

Somehow, I believe, anyone who wants to expand his business in future should consider these facts and get enough professionals to run the business at right time and also get their help in project planning and decision making. If you do not like, then keep doing it at your capacity while enjoying your ego.

I did not buy some IPOs in CSE due to the above reasons in additions to negative financial data.

Recommended reading:

What Got You Here Won't Get You There - Marshall Goldsmith


PC House and the Global PC industry 510UvKxV80L._BO2,204,203,200_PIsitb-sticker-arrow-click,TopRight,35,-76_AA300_SH20_OU01_



Last edited by Chinwi on Thu Feb 21, 2013 10:49 am; edited 1 time in total

7PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 9:20 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@seek wrote:A shop owned by PCH in Unit Plaza is now selling clothes. Smile

I went to UP after abt a year.. Didnt see the clothing shop though.. Where was it? Or just a joke Wink

8PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 9:29 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@seek wrote:A shop owned by PCH in Unit Plaza is now selling clothes. Smile

විහිළුවක් කලාට කමක් නැද්ද ?

මං හිතන්නේ ඔය රෙදි මේ IPO කාලේ PCH ප්‍රොමෝට් කරපු කට්ටිය ගේ ගැලවුන රෙදි වෙන්න ඇති Very Happy

9PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 9:55 am

kukumarx


Manager - Equity Analytics
Manager - Equity Analytics
Thank you Chinwi for a very interesting article. I am not a player in the computer industry, but I have some knowledge of what happened and I must say your assessment is spot on

10PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 10:01 am

kukumarx


Manager - Equity Analytics
Manager - Equity Analytics
@smallville wrote:
@seek wrote:A shop owned by PCH in Unit Plaza is now selling clothes. Smile

I went to UP after abt a year.. Didnt see the clothing shop though.. Where was it? Or just a joke Wink


Its on the basement level facing Galle Road, under BOC

11PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 10:49 am

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
Love Chinwi, nice write up , very valuable 7 informative.
Thanks

12PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 10:54 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Thanks a lot Chinwi, a very good eye opener to our inexperienced players.

13PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 11:21 am

Backstage

Backstage
Moderator
Moderator
Thanks Chinwi super stuff. I have a friend who is one of the players in the Bamba IT bazzar, will share this with him.

14PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 11:55 am

lion


Senior Equity Analytic
Senior Equity Analytic
Thanks Chinwi for enlightening on the history of PCH, the future looks very gloomy for the company.

15PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 11:59 am

No


Senior Equity Analytic
Senior Equity Analytic
Let's say no to these cheating h..... businesses and manipulators.You know now they are cheating and selling pch,pchh,pcp lower.Cheating ham.....

16PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 12:59 pm

seek


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@kukumarx wrote:
@smallville wrote:
@seek wrote:A shop owned by PCH in Unit Plaza is now selling clothes. Smile

I went to UP after abt a year.. Didnt see the clothing shop though.. Where was it? Or just a joke Wink


Its on the basement level facing Galle Road, under BOC

yes, that's the one.

17PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 1:13 pm

seek


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
This is a share that gave me 200% profit within 2-3 weeks, thanks to MW. It covered all my losses.

If trend continues, we will see this share is trading at 1/= very soon.

18PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 1:26 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Some of us started warning about PCH since early 2012 when revenue started dropping along with profits. Think there is about a 60% drop for early 2012.

To keep up in the Hardware IT industry one needs to be very innovative, competitive with prices (while mainding margins), customer friendly with after sales and most importantly have a risk management system in place as tech changes every 6 months.


In a country like ours one needs to be more careful as many people do not have extra spending money to buy absolutely non essentials.

Along with Chinwi's great update and above issues one can realize why companies like PPCH will mot do well during times of high inflation.

If one is still interested in PCH , I think it is best to think short term only. Untill PCH comes up with better plan and a cost/risk management system I would not go long with PCH.

Positives:

However PCH is now trading at well below NAV (but many better companies are too) . PCH is also highly speculative as there are only few in its sector so any news can push this up suddenly.

19PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 5:34 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics

I did not predict anything for future.

Remember , when a company failed to perform its directors take remedial actions and normally withing few months or few quarters they convert it to a better one.


BTW,
However PCH is now trading at well below NAV

@ slstock, is majority of NAV in inventories ?

If that so,
1) they have to sell them before getting outdated.
2) it is another hindrance for this type of companies.

20PC House and the Global PC industry Empty Re: PC House and the Global PC industry Thu Feb 21, 2013 5:57 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Their inventories are around 50% of assets. Seems very risky if they cannot dispose on time.


But their total Equity ( which makes up the NAV) is less than their inventory amounts right?


Didn;t these guys have BPO plans during the "hot period" ? Looks like it died down or never got implemented.

If they want to diversity into IT( as a buffer for hardware sale shocks), I think it might be wise for them to venture into software development side. But am not sure whetehr they have the contacts, the expertise or the timing right to do so now.



@Chinwi wrote:
I did not predict anything for future.

Remember , when a company failed to perform its directors take remedial actions and normally withing few months or few quarters they convert it to a better one.


BTW,
However PCH is now trading at well below NAV

@ slstock, is majority of NAV in inventories ?

If that so,
1) they have to sell them before getting outdated.
2) it is another hindrance for this type of companies.

Sponsored content


Back to top  Message [Page 1 of 3]

Go to page : 1, 2, 3  Next

Permissions in this forum:
You cannot reply to topics in this forum