Insider moves: Ong, wife of Challenger CEO Loo, buys shares; poised to grow ‘pricesensitive’ segment
Ong Sock Hwee, wife of Challenger Technologies founder and CEO Loo Leong Thye, bought some shares of the company from the open market recently.
On June 29, Ong acquired 12,000 shares for $ 5,400, or 45 cents each. On June 25, she bought 21,600 shares, also at 45 cents each and another 64,200 shares for $29,211, or 45.5 cents per share on the same day. The following day, she acquired another 20,400 shares for $ 9,180, which works out to 45 cents for each share. She now holds some 35 million shares or 10.15% of the company.
This means CEO Loo now has a total direct and deemed stake of 188.5 million shares, or 54.61%. This comprises a direct stake of 42.97% and a total deemed stake of 11.63%. Besides Ong, their son and daughter also hold some shares as well.
At an EGM held on June 27, 2019, minority shareholders voted against an offer made by Loo and concerted parties to buy them out at 56 cents per share.
On June 9, the company, in response to shareholders’ questions ahead of the AGM held on June 11, said that due to the Covid- 19 “circuit breaker” measures, its physical retail stores had to stay shut. Although it saw a “substantial increase” in online sales, it was not sufficient to offset the drop from physical retail.
Locally, Challenger has a flagship store at Bugis, plus three dozen other stores of different formats.
“However, based on preliminary estimates, barring any unforeseen circumstances, management expects the group to remain profitable for 1HFY2020 due to the sales in the months prior to the circuit breaker, and also the unprecedented support measures provided by the Singapore government which the board is grateful for,” the company says.
While the company is unsure how the rest of FY2020 will pan out, it believes it has a “healthy” balance sheet to see it through the year, where both revenue and earnings are expected to suffer.
Looking ahead, Challenger sees the potential to generate further growth in the socalled “price-sensitive” segment, under the brand PIT.Money which now has four outlets, as stated in its most recent annual report.
“As the economy is anticipated to go into recession, we foresee this segment will continue to grow and will continue to focus on it,” says the company.
Challenger also cautions that while online sales is growing, it is moving carefully and will only scale up where necessary. “Overall, we will continue to expand stores at locations where feasible and cost-efficient to do so, while non-performing outlets will be closed,” says the company.
In 4QFY2019 ended Dec 31, 2019, Challenger reported earnings of $5.1 million, down 12% y-o-y from $5.7 million a year ago. Revenue in the same period was $83 million, down 1% y-o-y from $83.9 million.
For FY2019, revenue increased by 3% y-o-y from $320.2 million to $329.6 million, thanks to higher corporate and trade show sales but offset by lower retail sales. However, earnings for the full year dropped by 9% y-o-y from $19.5 million to $17.6 million due to higher operating costs.
While the company paid a total dividend of 3.1 cents for FY2018, it declared a much reduced payout of just 1.5 cents for FY2019 to be prudent in view of the uncertain market outlook. The company does not have a fixed dividend policy.
As at Dec 31, 2019, the company sits on a cash pile of $77.9 million, up from $63.2 million as at Dec 31, 2018. That is around half of the company’s current market capitalisation. Its debt mainly consists of trade payables of nearly $20 million. Its net asset value, as of Dec 31, 2019, was 29.8 cents per share, up from 26.65 cents as of Dec 31, 2018.