Challenger Technologies

[violinist]

Not just "idiots" patronize Challenger. IT literates like myself does sometime because the cost isn't really that much different, taking into account use of membership (just tell them your friend's NRIC is enough), and the hassle of going down to SLS etc. Challenger serves a IT need, but can they continue to do better than smaller IT shops, Harvey Normal, Courts, and the ever growing online stores, etc?

[vader1671]

Buying IT products from Challenger is like buying your TV/household sets from Courts or BEST etc.

Only idiots and those who are lazy would do it. (with sincere apologies to those who patronise the above mentioned shop)

Having said that, I would still give Challenger credit cos it does fulfil a niche for the idiots and the lazy. Or perhaps those who place a greater premium on their time and dun mind paying 20-40% more for the same item.

As for the 24/7 concept, I think position it a Funan is a great idea compared to an ulu place like Jurong. A lot of people who were sceptical about Mustafa and NTUC going 24 hrs but those have proven to be a hit and I think Challenger will do alright.

Frankly, I must disagree. Challenger largely serves two sorts of customers, neither of which I classify as idiotic or lazy.

1) The not so IT savvy. There are people who need some assistance when purchasing a medium - large value IT product. Printers / External HDDs/ Laptops / PCs /etc. They know what they want or need but have no idea which item to choose from. They go to Challenger because it provides some sort of customer service, the prices are fixed and there is acceptable after sales service.

Have you ever seen people in SLS purchasing items who barely know anything? They get murdered. A lot of people are willing to pay a premium to get this extra peace of mind.

2) Folks buying small items. I have been to Challenger buying small items many items even though I know that I can get a superior price at SLS. Why? Because SLS is so bloody far away. Yes, I could travel all the way across the country there to bargain like crazy and save $1 or $2 on a LAN cable, but what's the point when I spend more than what I save on the commute?

Challenger's plan to open a store in every major neighbourhood hub is excellent and serves customers like me (and I'm pretty sure there are a lot of people like me)

I am vested, and Challengers new all time high is a pleasant surprise.

[mrEngineer]

The real power of Challenger is the ability to franchise. Neither Sim Lian Square nor Funan is able to mimic that. The other factor is its conservative business approach compared to Harvey Norman or Courts or the doom pending best denki.. If you buy into Challenger you are actually buying into the value of the management.

[memphisb]

Lonewolf: I think alot of us aint idiots who are walking and browsing Challenger stores. Most are lazy to go down to simlim which takes time and $. I think simlim has undergone alot of changes over the last 2 years through my observations. They are no longer as vibrant and quite few mega chain stores (ATF comes to mind) has closed down. Don't believe go on sat/sun, you will see now prcs then locals. I use to diy/upgrade my rigs every 12 months either for myself, friends or relatives. However now, we get used parts from forums for diy pcs (parts just get obsolete and out of time so fast and sls is sellling them at a premium for keeping them in shelves). If it is just for gadgets and other replacements then inner parts, challenger pops up when people decides to get something. Not simlim. Buy on your way home comes to mind.

In my opinion, 20-40% higher then simlim? is only substantial when its big priced tag items. If its just a laptop bag, a pack of dvdr, a thumbdrive, a budget digital camera of $300 or even just a iphone 4 casings, it translate to about $10-$50 difference. If you have got a membership card or just the nric of the holder, it will cut that hike over cheaper sources like sim lim to about few dollars. Add that to your commute time and money, is it worth it? well it depends on individual. Lets not forget that the nearest mrt bugis is not exactly near to simlim.

If you go to simlim, you will see people lugging or asking their parts to the counters, fighting for salesperson to charge their credits cards previously. Compare this to to challenger, which operate like a ikea/ntuc rows of helpful staffs which speak English reasonably well. The management is smart to take this approach to enhance the customer experience through a single but distributed queue and systematic payment.

If the customers are not going to simlim either because of the quarterly pcshow/comec/sitec or due challenger operating in heartland malls.

And if Challenger is able to fill the demands gaps during times where there isn't a show for those 'IDIOTS' or lazy ones who avoid simlim or the shows because of the hassle, i would very much want to be their biz partners

[dydx]

To understand and explain the continued success of (and potential threats to) Challenger's retail business, I think it is inadequate to just compare it with the competition from Sim Lim Square and the shops there. Apart from operating 2 megastores (1 each in Singapore and Malaysia) and a growing number of specialty stores covering most of the busy shopping malls in Singapore, Challenger's hold on its growing regular customers is also because of a well-conceived package of benefits for its membership scheme.....
http://www.challenger.sg/joinmember.html
The benefits included in the package are appealing and provide a strong total value proposition to encourage people to join as members and patronize Challenger's stores regularly. I guess this is the main basis behind Challenger's steady growth in sales and profits.

Of course, we should not forget the contribution to sales and profits from -
(1) Challenger's small-format stores located in Funan DigitaLife Mall trading under the name "Matrix IT Gallery".....
http://www.mig.sg/about-us/
(2) the relatively new on-line store trading under the name "12Buy.sg".....
http://www.12buy.sg/OnlineShopping/Home
(3) the B2B marketing division - focussing on SMEs in Singapore - trading under subsidiary Challenger IT Services P/L.....
http://www.challengerits.com/aboutus.htm
(4) the regular Challenger Roadshows being held at the atriums of many busy shopping malls; and
(5) operating sales booths at the request and on behalf of key OEM suppliers (like Seagate, etc.) at the regular IT shows held at Suntec and Singapore Expo.

Backed by a high and growing volume of product sales, Challenger should be able to get better price discounts and promotional incentives from most of the OEM suppliers. I guess this is an important factor contributing to Challenger's sustained ability in maintaining a decent GP margin and at the same time providing competitive selling prices to its regular member-customers. On top of that, many OEM suppliers have agreed to pay for in-store advertising in Challenger's stores, and this brings in additional revenue/profits to the retail operations.

On top of all the above, Challenger also has 2 other promising/growing businesses -
(1) Supplying LED light displays to many sectors in Singapore.....
http://www.cbd-evision.com/index.htm
(2) Indepedent call-centre and CRM services provider.....
http://www.incallsystems.com/index.html
which also markets Challenger Group's own in-house "Star Shield Extended Warranty" coverage on IT hardware to others.

Adding up all the above, Challenger is truly a multi-faceted IT retail enterprise!

[lonewolf]

Haha.. I din expect my off-the-cuff comments on idiots and lazy bum patronising Challenger to touch such a raw nerve.

Actually from the vocal and vigorous defence of the Challenger model, I can appreciate the 'brilliance' of its approach better. It recognise a niche and capitalised on it and is able to charge a premium for the same item.

[memphisb]

NEWS RELEASE - FOR IMMEDIATE RELEASE
Full-year results for financial year ended 31 December 2010
(“FY2010”)
Challenger has achieved historical high sales
and profits during the recovery year of FY2010
Net profit surged 24% on 26% revenue growth

http://info.sgx.com/webcoranncatth.nsf/V...E0037C100/$file/CHALLENGER_Press_Release_FY2010v3.pdf?openelement

[D123]

BTW, how did you compute SSS? U can't unless u know the breakdown of sales betw new and old (> 12mth) stores?

Well I calculated two metrics.
1. Total IT sales revenue divided by same store space (at least open for a year).

2. Total IT sales revenue divided by active retail space. The latter is a somewhat made-up figure, including all stores that were opened for at least a year, plus the new retail space added in the latest year, proportionate to their opening period. E.g. if a new store opens with 3000 sq ft of space in July 2010, 1500 sq ft of active space goes into my calculations of active retail space for that year.

Since we do not have same store sales data, I figured those could serve as conservative proxies, a least to observe trends. By the way, 2010 saw a very sharp bounce up for both figures.

Anyway, as mentioned in the latest earnings announcement, this year has been a record year for the company.

2011 will be an important year to watch for Challenger. They will be expanding with 2 more stores in Malaysia, one in Makhota Parade, Malacca, and the other in KLCC. IMO, much better locations than their Malaysian flagship in Mines.

[memphisb]

PROPOSED BONUS SHARE ISSUE

The Board of Directors of Challenger Technologies Limited (the “Company”) wishes to
announce that the Company is proposing a bonus share issue to its shareholders on the
basis of one (1) bonus share for every two (2) existing ordinary shares in the capital of the
Company (“Shares”), fractional entitlement to be disregarded (the “Proposed Bonus Share
Issue”).

http://info.sgx.com/webcoranncatth.nsf/V...E0034424A/$file/Announcement-Proposed_Bonus_Issue_Final_20110221.pdf?openelement

[dydx]

Challenger shareholders should be very, very pleased with the just released FY10 (ended 31Dec10) full-year results and proposed 1-for-2 bonus issue announcements.....
http://info.sgx.com/webcoranncatth.nsf/V...E0032CA94/$file/SGXNET-31Dec2010final.pdf?openelement [FY10 results announcement]
http://info.sgx.com/webcoranncatth.nsf/V...E0034424A/$file/Announcement-Proposed_Bonus_Issue_Final_20110221.pdf?openelement [Bonus issue announcement]
http://info.sgx.com/webcoranncatth.nsf/V...E0037C100/$file/CHALLENGER_Press_Release_FY2010v3.pdf?openelement [News release]

It is important to note that the bonus shares will be entitled to the declared $0.011/share Final dividend - i.e. in effect, Challenger has raised the FY10 Final dividend to the equivalent of $0.0165/share before adjusting for the bonus issue (vs. a $0.013/share Final dividend for FY09 paid).

With such good results and rewards, I guess many Challenger shareholders may be jumping high-and-low with joy or popping a bottle of champagne!