3 Things to Know About Challenger Technologies Limited’s 2017 Earnings

Challenger Technologies Limited (SGX: 573) is an operator of the Challenger chain of information technology (IT) retail stores and online IT marketplace, Currently, it has a total of 38 stores, consisting of one flagship Challenger store, 25 Challenger superstores and 12 small format stores.

Earlier this month, the company announced its financial results for the full year ended 31 December 2017. Let’s look at three main aspects of the announcement here.

Show me the money

Revenue for 2017 slumped 5% year-on-year to S$322.1 million largely due to “lower retail and trade show sales which were offset by higher corporate sales”.

However, net profit rose 32% to S$16.2 million. This was due mainly to the absence of one-off impairment loss provision for an investment made in 2016, and lower operating expenses.

Earnings per share consequently grew to 4.70 cents in 2017, up from 3.56 cents one year back.

The much higher net profit growth as compared to the revenue fall caused the net profit margin to increase from 3.6% in 2016 to 5% in 2017.

The company’s chief executive, Loo Leong Thye, said:

“We used 2017 to spring-clean our operations, close non-performing outlets, as well as review and manage our costs of operations. These have yielded a positive outcome, driving higher profit in 2017.”

Moving on to the balance sheet, as at 31 December 2017, Challenger Technologies had S$63.2 million in cash and cash equivalents, with no debt. This marked a significant improvement over 2016 where it had S$52.3 million in cash hoard with zero borrowings.

Return on equity for 2017 stood at 18.8% versus 15.5% seen in 2016.

Cash flow from operations for the year fell 6.2% to S$19.8 million. With a capital expenditure of S$2.1 million in 2017, free cash flow came in at S$17.7 million. This is down from 2016’s free cash flow of S$19.1 million.


The company had proposed a final dividend of 2.2 cents per share. Together with the interim dividend of 1.1 cents already paid out, the total dividend for 2017 would be 3.3 cents per share. This represents a payout of slightly more than 70% of earnings.

In all, S$11.4 million worth of dividends is to be dished out for the whole year. The dividends are well covered since the free cash flow for 2017 was much higher.

In 2016, the total dividend was lower at 2.7 cents per share (an interim dividend of 1.1 cents and a final dividend of 1.6 cents).

What the future holds?

Looking ahead, the company mentioned:

“The Group remains cautious of the business environment of the retail industry in Singapore and expects the operating environment to remains challenging. in view of this, the Group continues to execute improvement strategies in term of cost management, enhance operational efficiency and boosting productivity.”

Despite the challenging retail scene, Challenger Technologies had managed to grow its profits and increase its dividends in 2017.

Meanwhile, there are 28 surprising and important things we think every Singaporean investor should know--and we've laid them all out in The Motley Fool Singapore's new e-book. Packed with information and insights, we believe this book will help you be a better, smarter investor. You can download the full e-book FREE of charge--simply click here now to claim your copy.

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

Editor's note: A typographical error in the revenue for 2017 has been corrected.