Challenger Technologies

[felixleong]

Ya this industry getting too competitive, rivals courtsasia and harvey norman are not making things easy for challenger haha. The 4% yield however is still decent

[felixleong]

[Image: Challenger.png]

Highlights:

FY2013 revenue grew by 14% to $385.4M and gross profit margins remained consistent compared to FY2012.

FY2013 net profit increased by 6% to $17.3M. The percentage growth has not been as much as revenue due to higher expenses.

Proposed final dividend per ordinary share of 1.42 cents gives a total of 2.52 cents of dividend per ordinary share for FY2013, which is
50.8% of total Group’s net profit attributable to equity holders of the Company

My view:

4Q was pretty bad as earnings fell 6% from 1.40 to 1.32 cents, historically 4Q tend to be good so I wonder what when wrong.

Full year earnings came to 4.96 cents which was close to my expectation of 5 cents. Dividends improved by 12% so 2.52 cents is pretty decent.

I think higher rentals and staff cost would likely to continue to put pressure on retailers such as Challenger. For FY14 I would be fine if they can maintain earnings or grow it at 5% or so. Currently its trading at 12 times earnings and 4% dividend yield, as such I think Challenger is fairly priced.

[blackvice]

i went to Funan IT Mall on the weekend , many shops move out... i think challenger is the major tenant there with one big outlet on the most top floor , 2 minis one and the new valore concept store ..perhaps they can "acquired" the mall and name it Challenger Tower.

[dydx]

Based on the FY13 full-year results released last night…..
http://infopub.sgx.com/FileOpen/SGXNET_F...eID=274315 [results announcement]
http://infopub.sgx.com/FileOpen/CHALLENG...eID=274314 [press release]
Challenger has again managed to increase its business base and further strengthened its position in the Singapore iT products retail market - it has also emerged as the largest player in Singapore, and has proudly pronounced its strong market position!

[dzwm87]

i went to Funan IT Mall on the weekend , many shops move out... i think challenger is the major tenant there with one big outlet on the most top floor , 2 minis one and the new valore concept store ..perhaps they can "acquired" the mall and name it Challenger Tower.

Why would they do that apart from inflating their ego? It will clearly be a step out of their core competency. Right now, they don't need bigger store space.

[AlphaQuant]

..perhaps they can "acquired" the mall and name it Challenger Tower.

that will change the balance sheet profile drastically and lower the ROE massively, not to mention pose a whole basket of new risks that has to be priced in.

[felixleong]

Nowadays IT retailing is very competitive, places like Sim Lim square and Funan IT mall are tough to make $$ as retailers move closer to consumers by opening up in heartland malls.

Look at jurong east area alone... 3 challenger stores, 2 courts and also got harvey norman... the fight is so intense lol

[CityFarmer]

..perhaps they can "acquired" the mall and name it Challenger Tower.

that will change the balance sheet profile drastically and lower the ROE massively, not to mention pose a whole basket of new risks that has to be priced in.

Agree. It is quite a difference to move from an asset-light model to an asset-heavy business with properties.

(vested)

[felixleong]

Ya true, quite a big difference.

I think its better for Challenger to stick to their current model, renting is good for them as they can shift in and out easily. Relocating cost is not so much for them as their furniture and fixtures are quite portable as compared to a business .. say Starbucks? the setup cost is very high due to the renovation needed. As for challenger their set up cost is lower, just need to place a cashier and some shelf, move the inventory in etc.. thus giving them flexibility to relocate if revenues for that area is not up to target.

[blackvice]

nice discussion people ...haha anyway that is just a "suggestive concept" .