Best World

By the way MOFCOM is the authority governing direct selling activities in China, just in case anyone is unfamiliar with the term.

(09-08-2017, 11:36 PM)Squirrel Wrote: By the way MOFCOM is the authority governing direct selling activities in China, just in case anyone is unfamiliar with the term.

I think 工商局 as well.

(09-08-2017, 11:35 PM)Squirrel Wrote: Actually, there's a really straightforward way of figuring all this out.

Just like when someone is of doubt regarding a company's activities of reporting, you write to an IR. If you have questions, just need to write to MOFCOM to seek clarifications. Maybe someone can do that here. I have confidence in my level of proficiency in mandarin to do it if there is enough people asking for it here. Just not sure if I want to spend my time to do it.

Every thing is intertwined. At the same time, one could also write to ID, auditor and SGX so that they are aware of what we are trying to do.

Tax issue in China is an interesting area to look into as well. Like US, China citizen has to pay global tax.

Write to MOFCOM first is a good start.

I suspect some forum members here don't like fried chicken...

http://singaporemanofleisure.blogspot.sg...nimal.html


The attraction of this forum is we can sound out our investing thesis with those who are our polar opposite.

Even better when others reveal our blindspots!

(10-08-2017, 05:48 PM)Jared Seah Wrote: I suspect some forum members here don't like fried chicken...

http://singaporemanofleisure.blogspot.sg...nimal.html


The attraction of this forum is we can sound out our investing thesis with those who are our polar opposite.

Even better when others reveal our blindspots!

Jared Seah,

You hit the nail on the head. I fully agree with your “Fried Chicken” Illustration.

I’ve been following this Forum for many years.

When I read the posting, I do not care whether the person says he is vested or not.

I’ll try to see what he says, be it positive or negative and do my own home work.

I read many of Boon’s postings. I believe he has quite a balanced view.

He usually presents both the Pros & cons of the company.
 
Time will tell. You pick a company and see what Contributors said over the last few years and you’ll see the values of a person’s posting.

Just to share...

https://www.bloomberg.com/news/articles/...-crackdown

Today sell down may be related to this...

Its time BWI to show what they are made of...

This is the announcement from the 工商局

http://www.saic.gov.cn/zw/wjfb/lhfw/2017...68363.html

And Best World just got queried for their trading activity

A quick thought on investing in this particular counter

- What is the upside if everything goes well? Would the share perhaps double to $3 per share in a year or two?
- What is the downside if their practice in Hangzhou is queried by this campaign, especially when it is all outside of their legally permitted direct sale region?
- Their stronghold of Taiwan is not performing well. Historically, whenever a region falters, it falls hard. You can easily see that from non of the prior revenue contributing regions still materially contributing now. So how low will Taiwan go?

Is the risk/reward in line with your appetite?

(22-07-2017, 02:00 PM)specuvestor Wrote: China is growth engine. Taiwan is tapering. The focus on China is not inconsequential. If the China operation is shut down tomorrow where do you think the share price will be? That will be your guesstimate on China's contribution

I think forumers has already given feedback to mgt. Now it's whether investors trust they will make the right judgement call. And as usual, regulatory issue is a long process, especially China unless you step on someone's vested interest. Nothing may even happen for next 12 months even if regulators are investigating. As usual timing (not technicals) is an issue. Both bulls and bears can be right depending on the time frame.

But understanding your investment is always important first and foremost. Else you won't even know what timing or catalyst you are looking for

Their response is certainly faster than I expected... Do they read VB as well?

Sharing From Maybank

15/08/2017, 1 hour ago
Maybank KE Retail Research

Best World hit a low of $1.40 (-9.1%) in early trading following a negative Bloomberg article highlighting a government crackdown on alleged pyramid schemes in China, which prompted a SGX trading query.

Share prices for Herbalife (-7.8%), Nu Skin (-9.6%) and USANA Health Sciences (-10%) fell overnight after China's State Administration for Industry & Commerce announced a three-month campaign to police pyramid schemes, although it did not name any companies.

Given that the Chinese market is the key growth driver for the three global direct sellers, the regulatory clampdown could pose a significant risk on sales.

Best World has only recently made inroads into the Chinese direct selling market after obtaining its licence in Hangzhou city in Nov '16

In 1H17, revenue from China contributed 48% of Best World's overall sales of $100m, of which almost all stem from the export and manufacturing/wholesale segment.

Best World does not operate a pyramid scheme and will be introducing its direct selling operations in phases. The government crackdown is aimed at Ponzi schemes, which are illegal and is not directed against legitimate direct selling businesses.

As for now, Best World still operates the export model in China where it sells its premium skincare products primarily to beauty/hair salons, spa owners, etc. The model does not incentivise retailers to stock up on products (channel stock) as they would not receive any distribution gains, as opposed to the direct selling model.

Further, Best World has policies in place to prevent channel stocking, particularly in China, which could lead to pyramid schemes. Products sold in China are reportedly in short supply due to increased demand from consumer acceptance.

Following the selldown, Best World currently trades at 14.1x FY18 P/E, with consensus earnings growth forecast of 23%/16% in FY18/FY19.

Despite the near-term overhang on the stock, we retain Best World in the Market Insight Growth portfolio on the basis of its phenomenal earnings growth momentum as the group makes further inroads into China.

By Clement Ho