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Challenger Technologies Limited’s Latest Earnings: A Tough Start To 2017

Challenger Technologies Limited  (SGX: 573) reported its 2017 first quarter earnings on Tuesday. The reporting period was for 1 January 2017 to 31 March 2017.

As a quick background, Challenger Technologies’ business is fairly straight-forward. It has 40 stores in Singapore selling IT products and services. It also has three other smaller business segments in electronic signage, rental, and telephonic call centre and data management services.

You can 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 for the first quarter:

1. Revenue fell by 15% year-on-year to $76.5 million.

2. Profit attributable to shareholders was $3.2 million, down 14.7% compared to a year ago.

3. Earnings per share (EPS) was down 14.7% to 0.93 cents as well.

4. Cash flow from operations was $948,000 and capital expenditure was $125,000. The IT retailer generated $823,000 in free cash flow, more than double the $327,000 seen a year ago ($778,000 in cash flow from operations and $451,000 in capex).

5. As of 31 March 2017, Challenger Technologies had $54.3 million in cash and equivalents and no debt. This is an increase from the $42.3 million in cash and equivalents and no debt it recorded a year ago.

Challenger Technologies experienced a tough quarter, recording double-digit declines in sales and profits. However, the IT company remained free cash flow positive and kept a clean balance sheet.

Operational highlights

Challenger Technologies’ revenue fell due to lower retail sales, corporate sales, and contributions from tradeshows. These were offset by higher online sales. The IT retailer said that online sales now contribute around 10% of its total sales.

Challenger Technologies opened the doors to its new flagship Bugis Junction store on 1 May 2017. The company’s chief executive officer, Loo Leong Thye, said:

“With a new flagship, customers can expect more events and activities at a central location in the months to come.”

He also talked about Hachi.tech, Challenger Technologies’ online portal:

“Hachi.tech has just turned one but is already an important growth engine for us. We have confidence in growing online revenue, having put in place clear strategies for member acquisition, retention and growth. Hachi.tech will also play a critical role in contributing to our omnichannel approach, which has now strengthened our Bugis flagship opening.”

At its closing stock price of $0.46 on Tuesday, Challenger Technologies traded at 12.3 times earnings with a dividend yield of 5.8%.

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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.