3 Things Investors Should Know About Challenger Technologies Limited’s Business
Challenger Technologies Limited (SGX: 573) is primarily a retailer of IT (information technology) products, such as personal computers, tablets, printers, and more.
Besides running 43 bricks-and-mortar stores located around Singapore, Challenger Technologies also has an online market place for IT products called hachi.tech that was launched in April 2016.
Current and prospective investors in Challenger Technologies may want to know these three things:
1. Historical financial performance
Here’s a chart showing Challenger Technologies’ revenue and profit after tax performance from 2012 to 2016:
Source: Challenger Technologies 2016 annual report
As you can see, the company’s revenue has been declining after reaching a peak in 2013. In fact, the IT products retailer’s revenue in 2016 is nearly identical to that in 2012.
However, the company failed to sustain its profit after tax as well as revenue. In 2016, Challenger Technologies’ profit after tax was just S$12.13 million, down 26% from 2012. While the company suffered a one-off impairment charge in 2016, even if the impairment charge was excluded, the profit after tax in 2016 would still be just around S$15 million.
2. Dividend history
Challenger Technologies has consistently paid an annual dividend in the last 10 years.
This track record indicates that the company will probably continue to pay a dividend for the foreseeable future, so long as it is able to generate positive free cash flow.
In 2016, the company’s total dividend per share amounted to 2.7 cents, which is 1.9% higher than in 2015. At the company’s current stock price of S$0.47, it has a trailing yield of 5.7%.
3. The presence of an owner-operator
As of 13 March 2017, Loo Leong Thye controls 54.54% of Challenger Technologies’ outstanding shares. He also happens to be the company’s executive director and chief executive officer.
So as you can see, Challenger Technologies is a company whose controlling shareholder is also its business leader. With that much skin in the game, Loo’s interests can be deemed to be well-aligned with the company’s minority shareholders.
