(04-10-2014, 09:06 PM)CY09 Wrote: [ -> ]Challenger does seem to be selling at a fair value, given the 1.3M one-off loss from Malaysia; moving forward EPS should be 4 cents.
However, I am a bit skeptical of the success of Valore strategy. The accessories of Valore seems to be more ex than online comparable and the brand is not that well-known to be a moat. So I am unsure how successful will Valore be. Also, growth of Challenger is likely to be slow but stable. Probably 2% growth for EPS every year?
For those buddies interested, Challenger is also branching out into a new concept shop called "Musica". Musica is a store that sells musical peripherals and accessories. In my view, Challenger's strategy is branching out to be expert retailers of different electronic categories. In the short term, I suspect the new concept stores will cannibalize Challenger sales. However, if successful, the ability to be the "go to store" in each niche area will bear dividends and kill off retailers who does sales of large selection of IT products
thanks for the info
yeah at 4 cents earnings thats a PE ratio of about 11 times, with 2% earnings growth.. probably fairly valued for this small cap stock
Guess I will skip this counter, will take another look if they are able to make valore a success
I personally prefer them to focus on their core business such as selling Apple, Samsung products while trying to add new stuff (maybe sell Xiao Mi products too?)
it's a balancing act at the moment..
apple/samsung/xiaomi, they control their distributor's pricing and profit margins very tightly...
I have to agree that Challenger is on the right approach... move-in at all levels... mass-market and niche markets.. using different concept brands... their moat is their economy of scale retail/distribution network
I think the earnings growth/decline for Challenger will be anything but stable. The electronics retailing model by nature is highly subject to disruption from online retail and price deflation. Look at some of the retailers overseas for examples eg the US. Well managed company but extremely difficult sector IMO.
yup its a tough sector for sure
look at courtsasia as it lost almost half its stock value
earnings too such a big declined and the company is so highly geared
Radioshack is house known electronic retailer in USA. It's share price dive down from $70 (2000) to $1.
Radioshack - yahoo
Radioshack close 1200 stores
Hope that Challenger is doing something right and not "suffer" the similar faith as Radioshack.
I have to agree, numbers on the sheet can only tell you so much. It does look very cheap based on the aspect.
The good thing about Challenger is that we can play analysts and as part of our everyday lives, monitor their business.
From what I see, I'm a Challenger member, and they have been very strongly pushing me to buy Valore products by throwing 50% vouchers at me, and even extended them thrice when I didn't utilize them. Valore, IMO, has not been successful. Like what other buddies said, it is overpriced and when compared to what you can get online (Xiaomi powerbank, etc), there's no doubt which one I'll go for. And the Valore and Musica concept stores have always been empty when I walk past.
(05-10-2014, 09:49 AM)LocalOptimal Wrote: [ -> ]I have to agree, numbers on the sheet can only tell you so much. It does look very cheap based on the aspect.
The good thing about Challenger is that we can play analysts and as part of our everyday lives, monitor their business.
From what I see, I'm a Challenger member, and they have been very strongly pushing me to buy Valore products by throwing 50% vouchers at me, and even extended them thrice when I didn't utilize them. Valore, IMO, has not been successful. Like what other buddies said, it is overpriced and when compared to what you can get online (Xiaomi powerbank, etc), there's no doubt which one I'll go for. And the Valore and Musica concept stores have always been empty when I walk past.
Valore is good if you just look at profit margin. But yeah, it has not positioned itself well in the market (is it supposed to be a luxury brand, or a cheapo brand, or a luxury priced cheapo brand?) and is overall a bad idea, unless management does something drastic about it.
I think Valore's impact would be less than 1/4 of total revenues
Investors should look at challenger's core business, whether they can continue selling tablets, laptops, desktops & printers etc
main problems however are still labour cost and rentals
as well as online competitors
What we can see these couple of years is that technology is fast allowing consumers to purchase products/services direct from the service provider/manufacturer, the middle man no longer plays an important role in business. Challenger is a middle man. They probably need to innovate to stay relevant in today's fast changing world.
Grab taxi, allows users to get a cab direct.
Gogo van allows the delivery man directly serve its customers.
Nike sell shoes direct and allow customized colors.
Consumers can get the products and services at much lower cost than via the traditional channel.
In conclusion, the enablers of technology(Alibaba) and manufacturers of great products/service provider(Apple) will thrive.
Everyone else in between, tough luck.
Challenger is expanding on a slower scale and profits may be in after launching new stores (eg reopening in Simei). Admittedly, it has stable client base (memberships) and still identifying new opportunities. Valore, not doing well as expected, needs some marketing campaigns to drive. But, it won't affect Challenger much in profits margin.
I'll continue to observe mgmt. decisions before investing in this fairly valued stock.