Best World

(18-02-2019, 12:38 PM)MOV Wrote: https://www.businesstimes.com.sg/compani...ept-secret

Today drop 17% and trading halt. 

Analyst and broking house just 'woke up' from their stupor and question franchise wholesale model? And many other question in the article.

Now called 'social selling', not direct selling?

Iceberg Research replied on twitter suggesting that Iceberg has done some work on Best World before and attain some negative conclusion.

I'm surprised BT is the outlet that called Best World out, will be interesting if BT eventually gets it right. A strong credibility boost.

(18-02-2019, 12:38 PM)MOV Wrote: https://www.businesstimes.com.sg/compani...ept-secret

Today drop 17% and trading halt. 

Analyst and broking house just 'woke up' from their stupor and question franchise wholesale model? And many other question in the article.

Now called 'social selling', not direct selling?

IMO BW is long due for a correction as my own valuation of BW is less than the current price before the halt and also before the spectacular price surge.

Anyway, the discussion in this valuebuddies thread more than cover the concerns in the BT article.  

Sharing my thoughts on the concerns of the article :
1. From the much touted high potential direct selling to franchise model
    Direct selling involves a couple of risks(e.g. in previous BW annual global events, chinese high achievers mentioned the multi level      
    commission where it is not allowed in China but allowed in other countries. Given that it is a global event attended by people of different
    countries and with a cross country business model, these chinese PD, AD, whatever D, cld be addressing their success stories to
    the global audience in attendence. In fact, Nuskin also stated mispresentations/confusions by its members due to the different country
    regulations as one of the risk in direct selling). Hence, IMO BW may have felt that franchise is a better(not perfect) solution.
2. Tracking sales (cannot find in Dazhong Dianping)
    In fact, BW does not sell using the popular online channels like taobao, etc and instead their products are susceptible to counterfeit as
    mentioned in one of the AGM(Mr Huang then said counterfeits are already found in the mkt). Buying at discounted member price then selling
    on online channels defeats the purpose of its business model.
    Instead, Wechat/sina/weibo provides user engagement(need to search using chinese e.g. 皙之密)
3. League Table Rankings and Euromonitor
    I suspect BW is using Euromonito's data for the total monetary value of China' s premium skincare market, and based on their sales/revenue
    data, determine their own table ranking.


Pls note the above are from my knowledge and pls feel free to correct my understanding. Do wait for the official BW answers.

DODD.

On a side note, I do prefer if the BT reporter provides more in-depth questioning like our VB thread instead !

Looks like there is plenty to clarify.....................................ha-ha !

_____________________________________________________________________________________________________________
The Board of Directors (the “Board”) of Best World International Limited (the “Company”) refers to the trading halt requested by the Company at 11.23 a.m. on 18 February 2019 in order to prepare, finalise and release a clarification announcement to address the matters discussed in the Business Times article entitled “Sales of DR’s Secret in China: Best World’s best-kept secret?” published on 18 February 2019 in a comprehensive manner. The Company would like to assure its shareholders that it that it has conducted all areas of its business ethically and in compliance with applicable laws and accounting standards.
 
The Board would like to inform shareholders that the Company has consulted the SGX-ST and at the Company’s request, the SGX-ST has granted an extension of the trading halt by up to two days (i.e., the trading halt may be lifted no later than 8.30 a.m. on 25 February 2019 (Monday)).

Ths is an interesting one..................................................... 

__________________________________________________________________________________
Change of model
When Best World completed the switch from an "export" to a "franchise" model in China in July last year, it was able to charge franchisees a huge mark-up to the wholesale price that export agents had paid. This was reflected in the group's improved gross profit margin of 83.9 per cent in the third quarter last year, up from 67.2 per cent in the same period a year earlier, Best World said.
Group revenue surged 96.8 per cent to S$92.1 million in the same quarter.
Mr Huang said that operationally, the main difference is: Best World's China subsidiary is the one bringing the products into China, instead of the export agents.
Unlike typical franchise agreements where the franchisor takes a cut of the franchisees' sales, Best World's agreement with its Chinese franchisees allows it to recognise revenue upfront, because they must make payment before any inventory is shipped. (Recognising revenue upfront was an issue flagged by DBS' Ms Tay as she had problems reconciling it with underlying consumer demand.)

(18-02-2019, 07:36 PM)dreamybear Wrote: ........
2. Tracking sales (cannot find in Dazhong Dianping)
    In fact, BW does not sell using the popular online channels like taobao, etc and instead their products are susceptible to counterfeit as
    mentioned in one of the AGM(Mr Huang then said counterfeits are already found in the mkt). Buying at discounted member price then   
    selling on online channels defeats the purpose of its business model.
    Instead, Wechat/sina/weibo provides user engagement(need to search using chinese e.g. 皙之密)
.......

Nice to see u back, Boon, always look fwd to your close scrutiny of BW.  

BTW, sorry, valuebuddies, regarding my previous post, I made a mistake, I realized BW Dr Secret can be found in taobao. I had the understanding BW prohibit that.

There is also a dedicated webite selling its products : http://www.mysecretstore.com/

Hmmm, I am not sure what is the origin of the website i.e. set up by another DS member/distributor or BW itself.

Yes, Boon, long time no see. Glad that you're back.

I thought that BWL extension of halt is to observe what our valuebuddies is saying 
(I meant you lar)
in order to provide a solid answer instead of keep answering questions which 
did not address our valuebuddies concern.

I'm quite sure but don't quote me.

I think the main question has to be Mr Chan Soo Sen. 
{ side track - Mr Chan is a good man. He loves to sing }

He resigned on 15 Feb 2019.

Earlier, on 31st Jan 2019, there was an announcement that BWL result will be out on
26 Feb 2019.

31st Jan annouced that result is going to be published on 26 Feb.

15th Feb Mr ChanSS resigned

18th Feb BT published "social selling" article

These sequence of events could be a short film plot.

Any director want to give it a try?

Let me repeat, result coming out soon, Mr ChanSS resigned and 
3 days later BT publish that BWL is doing "social selling"instead of direct selling.

I bet Mr ChanSS knows about the BT article and rescue himself.

So, my first question is why Mr ChanSS resigned?
You can figure out easily and I believed BWL will provide a clear answer.
To belief or not, will be your choice.

---

Next will be the new social selling.
As far as BWL is concern, it's 100% within legal boundary and absolutely nothing wrong.

We sort of touch on this few months ago and could refresh again.

The goods belongs to the shop owner.
The shop owner paid in cash before they gotten the goods.

Now, how the shop owner sell the goods, not BWL problem.
What if the shop owner using MLM means to sell the goods? not BWL problem.

Of course, the model answer will not be so raw.
It will be polished up like continue education to shop owner, reminder, value and behaviour, etc

Again, you read and then make your choice.

For me?
I still think Bestworld is a good company.
I regrets the moment I sold all my Bestworld shares.

I only wish that HBC and 2D (and now their kids) can do the right things, moving forward.


宝贝, 加油!

Independent Directors may resign to make way for others, or as you speculate "to rescue" their reputation ahead of impending danger.
Chan Soo Sen, who is largely political content, resigned and didn't leave an empty seat for long. It was immediately filled by a senior adviser to McKinsey --- Fong Chester Po Wai.

https://links.sgx.com/1.0.0/corporate-an...3208d48b7e


Chester is 62, presumably in semi-retirement in HK. Do you think he accepted the post on just 1 call out of the blue from BW? Logically, he would have been approached months earlier, and BW's China strategy laid out for him to consider and do due diligence.


Previously, he was Chairman & CEO of Greater China for Colgate Palmolive. He will be able to contribute insights into consumer market in China / HK, which is key to BW's growth ambitions in China especially. He has sterling career credentials and hopefully no VB will say nasty things about his due diligence before accepting the invitation to BW Board of Directors. Not this man, as he was once also a part-time lecturer ( i think this is our equivalent of adjunct professor) on corporate governance in HK.

My guess is Chan Soo Sen was asked to step down to make way for Chester. Either that or Chan Soo Sen decided the rah-rah business of selling skincare products to women is not his cup of tea, or that he cannot contribute much.

(btw, to his credit, Chan Soo Sen did not resign as a director of Midas Holdings (before it imploded and after it started dying). He was Midas's independent non-executive director from 2006. In 2018, he accepted the post of non-executive chairman of Midas. He didn't run away)

Personally, I am waiting to see how they clarify on the issues.

It would be a good data point to deliberate on whether to buy the counter again. I have seen how they have grown the Taiwan revenues before in the heydays. The rate of growth is very possible in China if the same direct selling model is being implemented there.

However they are claiming a franchise model whereby cash is paid upfront for inventory. I don't really think they can claim that they don't know how the distributors there goes about business since these distributors are recognised in their annual conventions.

So in short, I find that their growth can only be justified by direct selling model. And yet their direct selling license only applies to the Aurigen series of health supplements, not the skincare products. If somehow all this can be explained as a legal and legitimate business model as per declared in the statement, that would be good for the investors.

I do feel meh whenever I see the stock price rocket. However I always tell myself its due to a change in the investment thesis for disposal. So I guess there is no regret in there, just envy. Seems like Iceberg is preparing a research piece as well. Waiting to see the scenario unfold.

(22-02-2019, 07:56 AM)Coco Wrote: Independent Directors may resign to make way for others, or as you speculate "to rescue" their reputation ahead of impending danger.
Chan Soo Sen, who is largely political content, resigned and didn't leave an empty seat for long. It was immediately filled by a senior adviser to McKinsey ---  Fong Chester Po Wai.

https://links.sgx.com/1.0.0/corporate-an...3208d48b7e


Chester is 62, presumably in semi-retirement in HK. Do you think he accepted the post on just 1 call out of the blue from BW? Logically, he would have been approached months earlier, and BW's China strategy laid out for him to consider and do due diligence.


Previously, he was Chairman & CEO of Greater China for Colgate Palmolive. He will be able to contribute insights into consumer market in China / HK, which is key to BW's growth ambitions in China especially. He has sterling career credentials and hopefully no VB will say nasty things about his due diligence before accepting the invitation to BW Board of Directors. Not this man, as he was once also a part-time lecturer ( i think this is our equivalent of adjunct professor) on corporate governance in HK.

My guess is Chan Soo Sen was asked to step down to make way for Chester. Either that or Chan Soo Sen decided the rah-rah business of selling skincare products to women is not his cup of tea, or that he cannot contribute much.

(btw, to his credit, Chan Soo Sen did not resign as a director of Midas Holdings (before it imploded and after it started dying). He was Midas's independent non-executive director from 2006. In 2018, he accepted the post of non-executive chairman of Midas. He didn't run away)

Yes my guess too. BW regularly replace their directors, if you check the year before, Mr Ravindran Ramasamy also stepped down for Mr Adrian Chan.

(22-02-2019, 04:26 PM)Millionfaith Wrote:

(22-02-2019, 07:56 AM)Coco Wrote: Independent Directors may resign to make way for others, or as you speculate "to rescue" their reputation ahead of impending danger.
Chan Soo Sen, who is largely political content, resigned and didn't leave an empty seat for long. It was immediately filled by a senior adviser to McKinsey ---  Fong Chester Po Wai.

https://links.sgx.com/1.0.0/corporate-an...3208d48b7e


Chester is 62, presumably in semi-retirement in HK. Do you think he accepted the post on just 1 call out of the blue from BW? Logically, he would have been approached months earlier, and BW's China strategy laid out for him to consider and do due diligence.


Previously, he was Chairman & CEO of Greater China for Colgate Palmolive. He will be able to contribute insights into consumer market in China / HK, which is key to BW's growth ambitions in China especially. He has sterling career credentials and hopefully no VB will say nasty things about his due diligence before accepting the invitation to BW Board of Directors. Not this man, as he was once also a part-time lecturer ( i think this is our equivalent of adjunct professor) on corporate governance in HK.

My guess is Chan Soo Sen was asked to step down to make way for Chester. Either that or Chan Soo Sen decided the rah-rah business of selling skincare products to women is not his cup of tea, or that he cannot contribute much.

(btw, to his credit, Chan Soo Sen did not resign as a director of Midas Holdings (before it imploded and after it started dying). He was Midas's independent non-executive director from 2006. In 2018, he accepted the post of non-executive chairman of Midas. He didn't run away)

Yes my guess too. BW regularly replace their directors, if you check the year before, Mr Ravindran Ramasamy also stepped down for Mr Adrian Chan.