Pintaras Jaya

What is the Source of High ROE ?

Publish date: Sun, 13 Apr 2014, 09:34 AM 

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I read about the various articles our fellow blogger have written about Pintaras Jaya. No doubt it is a great company. One of the most prominent feature is its aibility to deliver high Return on Equity.

 

 

The question I asked myself is what is their source of high ROE ?

 

 

As I browsed through the various articles, I noticed that the author have addressed this question before by explaining that Pintaras is sought after for its capability to undertake deep foundation construction work in an efficient manner.

 

 

I am not in the construction industry, so I am not in a position to comment on that. 

 

 

However, living in a capitalist society, I witness on a daily basis cut throat competition among businesses in various industries trying to undercut each other all for the purpose of snatching an extra penny of profit from competitors.

 

 

This happens across a broad spectrum of industries, from the DVD sellers at the Kopitiam across the street, to multi billion Ringgit enterprises providing telecommunication services to end users, to giant conglomerates manufacturing cement to build the infrastructure that we need. The list can go on forever.

 

 

The reason this is the case is because of two factors :-

 

(a) there is abundant liquidity in the system - for every business opportuity, there is no shortage of capital to be deployed to exploit the window of opportunity; and

 

(b) we are living in the information age - free flow of information and job market mobility provides vast pool of expertise to be tapped into should the need arises.

 

 

It is against this backdrop that I found Pintaras' persistent high profit margin baffling.

 

 

Have a nice day.