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ICT distribution still a cosy place for Mustek

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In November 2012 local PC distributor Mustek Ltd. sold its 41,84% stake in Comztek, a communications systems distributor, to Datatec Limited for a total consideration of R39 403 905 through a combination of cash and Datatec Limited shares.

David Kan, CEO of Mustek Ltd. Group. (Image: File)

At the time, David Kan, CEO of Mustek Limited Group and the man who founded the company back in 1987, said the sale formed part of the Group’s “ongoing drive to ensure financial strength and the best for the future of the business.”

Management at the Mustek Group, which wholly owns the Mustek and Rectron companies, say the sale was a necessary step in the evolution of the company.

Today, over a quarter of a century after the company began operations, conveyer belts housed within the company’s premises in Midrand, Gauteng are bustling with activity. They form part of the production line network that links components together and results in the supply of ICT product.

There is a real feeling that the decision to focus on brand expansion and service to the market – as part of its broad-based distribution strategy, is paying off.

Whilst there is no denying the impact on global economic pressure on the ICT distribution space, the company seems to have faired relatively well if one goes by financial results for the period ending December 2012.

These results state that:

• Revenue from continuing operations up 10% to R1,807 billion

• Headline earnings per ordinary share up 137%

• Net asset value of 712 cents per share

“We are strongly encouraged by this set of half year results, which shows that our strategy of expanding our basket of products and leveraging key industry partnerships, with a defined focus on specific vertical industries is proving successful. Our drive to deliver ‘turnkey’ solutions that are flexible and able to meet the evolving needs of the market is at the centre of our service offering,” says Kan.

Adding product to its mix

The company believes it is in a strong position, strengthened by the incorporation of new products into the fold. These include the likes of Lenovo and Acer.

The revenue growth during this period was supported strongly by the addition of the Lenovo and Acer product ranges, whilst the group added to its product portfolio offering through the introduction of the Huawei Enterprise Solutions, Miniflex range of fibre cables, eBeam and  Solar energy solutions.


Hein Engelbrecht, MD of Mustek Ltd. (Image: Mustek)

“We have expanded the brand and offering, and we are seeing some solid traction on that,” says Hein Engelbrecht, MD of Mustek Ltd. “At the beginning of last year we signed up Lenovo and we are seeing some nice inroads being made.”

With Lenovo PCs and notebook range added to the mix, Mustek has exclusive distributorship for Mecer, its proprietary brand range, alongside Brother (printers, fax machines and multi-function devices), Acer (PCs, notebooks and projectors), Epson (printers and projectors), Fujitsu (scanners), Huawei (enterprise telecommunication, service and storage solutions), Microsoft Hardware (keyboards and mouse devices), NEC (monitors and projectors), NComputing (multi-user solutions) and Toshiba (notebooks and monitors).

Although there is an air of confidence at Mustek, management acknowledges the need to differentiate the business to achieve margin and market share amid growing competition.

Engelbrecht points out that the company services and supports product sold – the value proposition being that buyers avoid the hassle of “being sent from pillar to post to be helped”.

Looking ahead in 2013, Engelbrecht says that in there is a lot of scope for business in the traditional desktop market and the opportunity to grow market share as some of the bigger players defocus.

Engelbrecht has also stated that the company is looking to bolster its supply of solutions in the mobility, cloud, security, networking and fibre arenas. It will also play its part in emphasising a number of key industries including education, health, security and solar energy.

He pinpoints opportunities within the construction of stable platforms based on quality components and offer tailor-made product to consumers, as well as the relevance of workplace trends, such as BYOD.

In terms of IT hardware, he anticipates high growth within the apps and mobile space, with several manufacturers focused on the introduction of new products.

He also says Microsoft’s activity and effort to create new markets will also result in new opportunities going forward.

“You have to be careful if you look at the word ‘growth’ – it means you are growing from somewhere,” says Heins. “So in terms of the install base – is the PC going to disappear? I think it might change and all-in-ones will play a bigger role than in the past. There are probably about a million desktop machines still being sold annually in South Africa – is that going to disappear overnight? I don’t think so. Will it grow? Not necessarily, but it will still be there. Are we expecting every government employee, corporate employee or bank employee to suddenly only work on a tablet or notebook? No, it’s not going to happen.”

Additional facts about the company’s assembly line:

  • The assembly line is 2530 m2
  • On average the line makes 400 units a day (unit complexity dependent). This can be increased to 800 units per day. Mustek made 127 500 units in their last financial year
  • 44 people are employed at the assembly line in Midrand
  • Mustek currently employees 555 people nationally, with branches in: Johannesburg, Cape Town, Durban, Polokwane and Nelspruit
  • The assembly line has been operating for approximately 8.5 years
  • The line assembles all products for the Mecer brand. On multinational brands they provide a software imaging value add.
  • The largest semi-automated computer assembly line in South Africa
  • It has flexibility for build-to-order and/or customisation
  • It has the ability to accommodate customer specific requirements and to apply customer-specific software imaging
  • The line provides asset tagging of individual units, which links back to the original case serial number
  • Mustek’s assembly line is an Accredited Service Provider to the following brands: Mecer, Brother, Posiflex, Acer, Toshiba, Lenovo, NEC (Enterprise), General Dynamics, Mustek Digital Signage, Mustek POS Solutions, Mustek Security Tecnologies, Miniflex and N-Computing

Chirs Tredger, Online Editor

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