On Economic Moat:
Challenger is something that is probably familiar with most of us. A retail play specialising in IT products, it has branches all over Singapore and still expanding (e.g. the latest store just opened in Tanglin Mall).
I like Challenger over its competitors such as Harvey and Courts for its more focused approach.
I also like the "membership" strategy which gives it a more consistent customer base.
I see the Valore brand products as a potential growth catalyst.
Its financial numbers support the above narrative with consistent & growing earnings and a strong balance sheet.
On Margin of Safety:
Current PE is close to 12 based on approx. 5cents earnings. This being a growth company and anticipating some further growth to this company I think fair value is probably closer to PE 15.
My average purchase price 50cents gives me more than 20% margin of safety which is good enough for me.
Dividends & Debts:
This is what I like about this company, I am getting about 5% dividends and expecting further dividend growth. It is also net cash. =)
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