Challenger Technologies' Profile
Challenger Technologies Ltd (SGX:573) is a company that mainly operates in Singapore and engages in retail information technology (IT) products and services. The Company also has two other business segments including electronic signage services and telephonic call centre and data management services.
As I write, Challenger Technologies Ltd is valued at S$177.8 million in market capitalization. In this article, I’ll revisit its fundamentals, bring an update on its latest financial results, and assess its investment potential.
Here are 3 things that you might like about Challenger Technologies Ltd:
#1: Great sustainable dividend history
Even though Challenger does not have an official dividend policy, it has a good dividend history where the payout ratio was maintained under 60% on average, a pretty healthy level for a company to be established as a leader in the industry.
Its latest proposed final dividend of 2.0 cents per share, together with an earlier interim dividend of 1.1 cents, makes the total dividend payout for 2018 to be 3.1 cents. This translates to a 55% payout ratio of its earnings and an
alluring 6% dividend yield.
As Challenger does not seem to have a plan for aggressive expansion, we believe that it is sustainable for Challenger to continue distributing about half its earnings to its shareholders. All the while retaining enough to reinvest back into the business for expansion.
#2: A Conservative Management
Who wouldn't like to own a company where the people who manages it are very cautious people?
In the light of macroeconomic uncertainties such as Brexit and the Trade War between China and US still ongoing, Challenger has decided to maintain a cautious outlook on the overall retail business environment and focus on existing cost management measures across the Group and maintain their competitive advantage.
However, this does not impede their growth as Challenger has also announced a new 5,000 square feet store to be opened at Paya Lebar Quarter in the first half of 2019.
#3: IT Retailing moving into Online Presence
Proclaiming to be "The Market Leader in Singapore's IT Retail Scene", Challenger sure lives up to its name. It is quite rare to find another IT retail store as omnipresent as Challenger.
Furthermore, the company is also riding on the eCommerce wave through its online tech-shopping website Hachi.Tech to cater to tech-savvy millennials.
In its Annual Report 2017, CEO Mr. Loo Leong Thye mentioned this:
"The main drivers were from our much-awaited, conveniently located new Flagship store at the basement of
Bugis Junction, as well as Hachi.tech (Challenger's online store) rounding off its first full year of online operations by doubling its sales."
He added,
"(we are) enhancing our online presence by focusing our ValueClub app to engage and communicate primarily with our members closely in the coming year."
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