I feel that the biggest problems faced by Challenger would be the increase in labor and rental costs, rental costs especially given how all of Challenger stores are leasehold. However, if we were to think about it, while Challenger may be facing this problem, so would Challenger's competitors. I have not exactly done an analysis to compare between Challenger or their competitors say Courts. But Challenger being a company that is so cash rich and debt free, they are at an advantage in weathering tough times. Essentially, a survival of the fittest.
(not vested)
Valore could be small to revenue contribution but this is not a store in a neighborhood estate but in similar malls as Challenger. Rental cost is going to kill them if it doesn't deliver since sales per sq ft is going to be dragged down. It will be more appropriate to look at profit level: how long will it take for the store and brand to mature (if ever).
(06-10-2014, 10:30 PM)LLS Wrote: [ -> ]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
FYI, the core products sold in Challenger, aren't the tablets, laptops, desktop, and printer, but the accessories. It is a key differentiation from Courts or Harvey Norman.
(vested)
(07-10-2014, 08:22 AM)heifien91 Wrote: [ -> ]I feel that the biggest problems faced by Challenger would be the increase in labor and rental costs, rental costs especially given how all of Challenger stores are leasehold. However, if we were to think about it, while Challenger may be facing this problem, so would Challenger's competitors. I have not exactly done an analysis to compare between Challenger or their competitors say Courts. But Challenger being a company that is so cash rich and debt free, they are at an advantage in weathering tough times. Essentially, a survival of the fittest.
(not vested)
I do agree labor and rental costs, are the two expenses to watch.
FYI, base on historical data, the company spent 6-7 cents per $ sale, while Courts and Pertama (owner of Harvey Norman) spent around 8-9 cents per $ sale. Furthermore the company's staff seems more well-trained, comparing with the other two.
The rental expense was well-managed so far, but we did see a spike in FY2014, might be due to new Valore shops, which doesn't contribute to the top line yet.
(vested)
shall wait to see if q3 and q4 earnings able to hold up or not. My guess is for 2nd half earnings to be flat or down 5%(since less 3 msia stores) i think challenger is no longer a growth stock, but could potentially be a good dividend stock if they raise payout ratio to say 60-80%(their policy is to pay at least 50% of earnings)
My friend paid $49.90 in total to renew his 2 year membership and got a Valore powerbank of 3500mAh (retail price $59.90) and $60 Valore Voucher. His view of the powerbank is that it is not that bad. However from the looks, I find its rather expensive as i can get 5200 mAh Powerbank at $8.90 from Xiaomi. Similarly, a quick walk at Tampines 1's challenger shows Valore prices at 50% off retail for members and 70% off online for selected products. The crowd was of 2 shoppers, but hey it was a Tuesday night
I am not too optimistic of Challenger's prospect and am predicting a decline in earnings compared to Q3 Fy 13 on the back of lower revenue recorded. To me, my fair price for Challenger is 44 cents and if I want a MOS, it has to be at least 30%, especially Challenger is bounded by the local retail market and restructuring of its brands
A minor disclosure, but does it mean Valore strategy has changed? Let's see the detail in next financial report.
(vested)
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The Board of Directors of Challenger Technologies Limited (“the Company”) wishes to announce
that its wholly-owned subsidiary, Valore Retail Pte. Ltd., has changed its name to Challenger
Mobile Pte. Ltd. with effect from 14 January 2015.
http://infopub.sgx.com/FileOpen/Challeng...eID=331361
No wonder the AMK hub Valore store change its nane to Challenger.
Now we have 2 Challenge stores at AMK hub. Its kind of odd, isn't it?
Not vested.