Challenger Technologies

Challenger Technologies (CT) is a household name in Singapore.  It is operating in a competitive market yet its financial results often surprise me pleasantly.

CT released its Full Year 2015 results on 15 February 2016.  It is a strong set of results with 4Q15 net profit increased by 50% compared to 4Q14, and FY15 net profit increased by 22% compared to FY14.  This is despite of a slight decrease in revenue for 4Q15 (9% decline) and FY15 (1% decline) compared to 4Q14 and FY14, respectively.

CT has paid an interim dividend of 1.1 cents and will pay a final dividend of 1.55 cents, which total to 2.65 cents, as compared to 2.35 cents in FY14.  CT has been friendly to minority shareholders and has been rewarding them by paying about 50% of net earning as dividend.

Challenger's megastore at Funan DigitalLife Mall will be closed for 3 years due to the redevelopment of the Mall. This will impact Challenger's revenue and net profit and this might be the reason the market greeted its latest results with a lukewarm response.

At the last closing price of 40.5 cents, the yield is 6.54%, which is not bad.  In addition, it has a high return-on-equity (ROE) of 24.1%.


Its Founder and CEO, Mr Loo Leong Thye has been buying Challenger's shares from the open market.  Challenger is a very well managed company and it has been trying to increase its revenue and net profit.  It has tried the Valore concept but failed.  Despite of the failure of the Valore concept, it did not hurt Challenger's revenue and profit much. The Management is now looking at setting up a brand-new online market place in the second quarter of FY2016.  This aims to complement its existing brick-and-mortar retail business as well as to widen its customer base.

Despite of the challenges faced by retailers, I am impressed with the Management's steering of the business; hence, I decided to initiate a position at an average price of 41.4 cents per share.   I will accumulate more if the price falls below 36 cents with no deterioration of fundamentals.  My investment horizon is a few years and I hope to achieve an annual compounded return of more than 10%.

Time will tell if I can right.

Here are its financial numbers and ratios of CT at the last traded price of 40.5 cents:
PER - 7.84
Price/NAV - 1.89
ROE - 24.05%
Dividend yield - 6.39%
Price/Net-net current assets - 2.60
Cash per share - 12.07 cents
Debt - 0

Here are its key financial data for the last 10 years, which I extracted from the data maintained by Shareinvestor.com.

 

Here are some write-ups and analyses of CT and I will update the list whenever I find any interesting new write-ups:

https://www.fool.sg/2015/12/15/can-challenger-technologies-limited-successfully-conquer-this-latest-challenge-to-its-business/