Challenger Technologies in Focus

Challenger (5l0.SI)

(23Feb2017) close: S$ 0.475

12-M Target price: S$ 0.450

1.) Sector: IT products retailer

2.) Core business structure:  Their core business is IT products and services segment.

3.) Business Segments: There are 3 segments.

  • The IT products and services segment is involved in retailing a large selection of IT products including personal computers, notebooks, printers, scanners, digital imaging solutions, personal digital assistants, mobile and wireless connectivity solutions, audio-visual and projection equipment, and related peripherals.
  • The electronic signage services segment is involved in the supply and installation of electronic signages and provision of electronic signage services.
  • The telephonic call centre and data management services segment carries on the business of telephonic call centre, data management services and direct marketing services.

4.) Countries that the business operates: Mainly in Singapore

5.) Challenges: Across most sectors and industries, FY2015 was a difficult year. Challenger continued having to grapple with higher operating costs, a tight labour market and changing shopping preferences amongst customers. 

6.) Strengths:  Net profit increased 22% to $18.3 million while revenue dipped only 1% or $2.9 million, compared with FY 2014. This was due to their consistent efforts in cost management and increasing productivity, ensuring they achieve the same results with the same or less manpower.

7.) Significant events:

Challenger Technologies has confirmed the lease on its new flagship store at Bugis Junction.

Spanning almost 14,000 sq ft, the basement 1 location is set to open by the second quarter of 2017. It will complement the existing Challenger store at level 3 in Bugis Junction, and add to the group’s overall portfolio of almost 50 stores islandwide.

8.) TABLE:

9.) Alp Conclusion: The bricks-and-mortar retail industry in Singapore has been facing harsh of competition from online retail platforms. Challenger Technologies has not been spared from this adverse impact as shown by its weakening fundamentals.  To combat the online threat, Challenger Technologies has launched its own online market place, Hachi.tech, in April 2016.  Complemented by their vast network of physical retail stores in Singapore, Hachi.tech combines the largest range of IT products available online with the convenience of delivery or pickup in store for time-strapped customers looking for the latest tech lifestyle products. Time is needed to see whether this new initiative could work.

DISCLAIMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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