Challenger Technologies Limited’s Latest Earnings: Revenue is Up, But …

Challenger Technologies Limited  (SGX: 573) reported its fiscal first-quarter earnings yesterday. The reporting period was for 1 January 2016 to 31 March 2016.

The business of Challenger Technologies is fairly straight-forward: It is primarily an IT products and services retailer with 48 stores around Singapore.

You can read more about the company in here and here. You can also catch up with the results from the company’s previous quarter here.

Financial highlights

The following’s a rundown on some of the company’s latest financial figures:

  1. For the quarter, Challenger Technologies’ revenue rose by 8% year-on-year to $90.4 million.
  2. Profit from continuing operations was $3.68 million, down 2% compared to the same quarter last year.
  3. Earnings per share (EPS) was up 2% from 1.07 cents in the first-quarter of 2015 to 1.09 cents in the reporting quarter.
  4. Cash flow from operations was $778,000 with capital expenditure coming in at $451,000. The IT retailer thus generated $327,000 in positive free cash flow. This is a big increase from a year ago when cash flow from operations came in at a negative $10.3 million.
  5. As of 31 March 2016, Challenger Technologies had $42.3 million in cash and equivalents and no debt. This is largely unchanged from the $42.0 million in cash and equivalents and no debt it recorded a year ago.

In sum, Challenger Technologies managed to grow its sales but not its profit. The IT retailer was also mildly free cash flow positive and had kept a clean balance sheet which will be important for its future initiatives.

Operational highlights

Challenger Technologies’ top-line grew largely due to an improved performance from tradeshow and corporate sales. Expenses rose faster than sales, though, due to higher staff costs, premises and other operating expenses due to more store openings.

Loo Leong Thye, Challenger Technologies’s chief executive, talked about the company’s digital push regarding the launch of in April 2016:

“Online shopping is an additional and important growth engine for us. will house many times more products than our physical retail stores, giving our customers more choice and convenience.”

Many eyes are on Funan DigitaLife Mall’s closure and the impact that it will have on Challenger Technologies (the company’s flagship store is in the mall). Loo added:

“We are also focus on our closure sale at Funan that is happening from now till 30 June 2016 when the mall will be closed for redevelopment. Many items are now available at Funan with huge discounts.”

At its closing price yesterday of $0.45, Challenger Technologies traded at around 8.5 times trailing earnings with a dividend yield of 5.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.