Challenger Technologies

oh no....mega-store closing for 3 years.... gosh... sales revenue going to go down.... :O

bad news....

Financial results for the year ended 31 December 2016

Highlights :
* Group revenue dipped slightly by 4% or $12.8 million to $339.4 million for FY2016
* 4Q2016 revenue decreased by 13% or $12.2 million to $83.4 million compared to 4Q2015
* Net profit decreased  44% to $4.2 million for 4Q2016
* Net profit decreased 27% to  $13.3 million for the year ended 31 December 2016
* Without impairment loss provision, net profit for the full year and 4Q2016 would decrease by only 15% and 29% respectively
* NAV per share = 23.24 cent as at 31/12/2016
* Earning per share = 3.89 cents for FY2016
* New flagship store to commence operating in May 2017
* Full year dividend up 2% year-on-year to 2.7 cent.

More details in :
1. http://infopub.sgx.com/FileOpen/SGXNET%2...eID=439263
2. http://infopub.sgx.com/FileOpen/CHALLENG...eID=439264

The Board of Directors of Challenger Technologies Limited (“the Company”) wishes to announce that the Company has secured the following new lease:

Name of shopping mall at which lease is located Date of Commencement
Paya Lebar Quarter – Challenger store 3Q 2018

http://infopub.sgx.com/FileOpen/New%20Le...eID=458749

While Challenger continues to make good money, its competitor Newstead is driven to liquidation.

http://infopub.sgx.com/FileOpen/Challeng...eID=543740

https://www.straitstimes.com/business/de...iquidators

Both operate in the same space of retailing computer/IT peripherals, with similar products and cost structures. Only the people managing the business are different. If this is indeed the case, then what has Challenger's management been doing that is different from their competitors? To the effect that the former soared while the latter sunk?

From a customer service perspective, does Newstead perform poorer compared to Challenger? Perhaps frequent shoppers of these two establishments may share their experiences.

On a more general business analysis perspective, how do we identify management that will deliver superior results?

One thing abt Newstead is that item bought from them is not exchangeable or returnable as stated clearly in the receipt while Challenger did the opposite. This puts me off purchasing from Newstead.

(16-02-2019, 10:23 AM)karlmarx Wrote: While Challenger continues to make good money, its competitor Newstead is driven to liquidation.

http://infopub.sgx.com/FileOpen/Challeng...eID=543740

https://www.straitstimes.com/business/de...iquidators

Both operate in the same space of retailing computer/IT peripherals, with similar products and cost structures. Only the people managing the business are different. If this is indeed the case, then what has Challenger's management been doing that is different from their competitors? To the effect that the former soared while the latter sunk?

From a customer service perspective, does Newstead perform poorer compared to Challenger? Perhaps frequent shoppers of these two establishments may share their experiences.

On a more general business analysis perspective, how do we identify management that will deliver superior results?

This stock has baffled me for a long time - the performance of the stock has been pretty good(at least imo) despite .....

No offence to investors of this stock, but personally, for me, I can rarely find any reason to shop in Challenger even in the past, maybe to buy MS product licence and that's about all. I do not find any of their products unique nor prices cheap. I do not know of anyone who shops there regularly, and also noticed most of the customers in the shop are merely browsing rather than making purchases. Even their own brand valore products do not seem value-for-money despite it being touted to be. During the past few years, I have been buying IT products regularly from Qoo10 where the prices are much cheaper.

Based simply on observations, I think we can sort of predict it is only a matter of time for IT retailers(e.g. Newstead, Epicentre) to decline, given that they are acting as mere middleman without any revolutionary change in business strategy or in the working world, we say its insufficient to just value add, we need to value create nowadays. Furthermore, there are many IT retailers as competitiors, rental and manpower costs are very high in SG, yet margins for IT products are low.

As a sidetrack, I am also surprised that the organizers of IT exhibitions(e.g. Comex, IT show, PC show) are still continuing in their old business strategies, despite the unstoppable trend towards online shopping.

No, I do not have the answer to Challenger's magic formula(my best guess wld be corporate sales, IT services or membership). Challenger seems to be doing something very right indeed despite all the challenges, and I am also very keen to know the answer !

Dreamybear, I have the same thoughts as you, by giving this cursory thoughts.
Maybe, you could buy 100 shares and ask the management their secret formula to sustain business and share in VB? ^ ^

Most people get far too carried away with online sales and disruption.
Most products do not magically appear out of no where, it will still need to be produced from a factory, it will still need to be distributed.
Brands/dealers are going omni-channel. And pricing is becoming more and more similar between a physical shop and what you can get online. Most if not all major brands have a MAP(Minimum advertised price) policy.

Personally, the stuff that I get online from unknown sellers are items of low value and of little importance. The items that I order online that are of higher value are directly from the brand owners or have a physical store as well. I.e. Household electrical items or IT. And I do order from Challenger(I own no shares of challenger) or pick up from the store. It is a fair price and store located near where I stay, I don't find anything significantly cheaper elsewhere.

Online sales is just an extension/a new channel of doing business more efficiently/effectively. A progression that has been been in motion since the beginning of time. It works great for some products and services and not so great for others. If the business itself is fundamentally flawed, it doesnt matter where or how it conduct its business, it will fail anyway with or without any competitor. (I.e. Bike share)

Ntuc probably also figured this online ordering/delivery doesnt work for them. And thus ended the partnership with honest bee. Redmart still could not figure how to make the slightest dent in the groceries market despite burning millions. Amazon did not become what it is by virtue of being online. It is what it is by a sound business strategy by having the widest range, lowest prices, quickest delivery. And those things do not happen automatically, Amazon has warehouses that store fast moving items that it buys direct from brand owners in bulk at lower prices. Amazon overheads are not exactly low. The next phase of growth for Amazon is probably physical stores.

The Business Times article gives us a glimpse of Challenger's secret formula:

https://www.businesstimes.com.sg/compani...cept-store

A portion of the Business Times article:

Back in 2016, Challenger launched its online store, Hachi.tech, and projected that the portal would deliver 50 per cent of revenue in three to five years.

Today, less than 5 per cent of revenue flows through Hachi.tech.

Mr Loo explained the change in strategy: “If I sell online cheaper, everybody will flock online. It will cannibalise the retail, same time I will be very busy doing a lot of (after-sales) services. Because we are strong in providing customer service, so the more you sell, the more problems you will have.”

dreamybear: Maybe you can share with us the reliable sellers that you frequently purchase products at Qoo10?

I usually only buy IT products at Popular BookFest as there is more assurance of product quality.

(18-02-2019, 08:11 AM)holymage Wrote: Dreamybear, I have the same thoughts as you, by giving this cursory thoughts.
Maybe, you could buy 100 shares and ask the management their secret formula to sustain business and share in VB? ^ ^

I don't mind spending a bit of money on education(given that I already spent a lot on IT courses due to the nature of my IT profession). But the problem is I don't think they will just tell me everything since I hv learnt that mgmt/investor relations replies are usually very "guarded" and only specifically answer the questions and nothing more.

I will consider Challenger if it trades below NTA(but with a margin of safety as IT inventories can get obsolete very fast) but don't think the share price will correct anytime soon.

Furthermore, I am currently looking for companies(at attractive valuations) which offer its own reliable pdts and offer scalability(e.g. Apple, retail companies in china mkt), hoping to find the next multi-bagger.       BTW, still cannot find ....  

(19-02-2019, 01:56 PM)weii Wrote: The Business Times article gives us a glimpse of Challenger's secret formula:

https://www.businesstimes.com.sg/compani...cept-store

A portion of the Business Times article:

Back in 2016, Challenger launched its online store, Hachi.tech, and projected that the portal would deliver 50 per cent of revenue in three to five years.

Today, less than 5 per cent of revenue flows through Hachi.tech.

Mr Loo explained the change in strategy: “If I sell online cheaper, everybody will flock online. It will cannibalise the retail, same time I will be very busy doing a lot of (after-sales) services. Because we are strong in providing customer service, so the more you sell, the more problems you will have.”

dreamybear: Maybe you can share with us the reliable sellers that you frequently purchase products at Qoo10?

I usually only buy IT products at Popular BookFest as there is more assurance of product quality.

Actually, I am not sure why Challenger wants to launch Hachi.tech when they can leverage on Lazada or Qoo10. IT personnel costs for maintaining and operating a retail website is not cheap(direct and indirect(managing the IT workforce)). Furthermore with recent data security incidents in SG, scrutiny and costs will only escalate. It may make sense if they really have large economies of scale.  

First, I must clarify I don't go for the newest IT products(cheapskate mah) but those that have been around in the market for 2-3 years already.
Thinkpad Laptops : Lenovo SG website
Tablets : Qoo10 Daiso (however no warranty since direct from Korea but so far bought almost 10 throughout the years all ok)
Air purifier / KDK Fan : Parisilk, Toyomi(official website)
HP/SD cards/portable HD/thumbdrive : Qoo10 but depends on which retailer offers best promotion.
The rule of the thumb for me is to get from the original shop itself or those resellers with many many reviews even though the price may be slightly higher than those without reviews. And I try to buy during coupon weeks.

Yes, bookfest also offer good deals on portable HD and thumbdrive.