Best World

2Q2018 Results:

In a press release issued by the Group on 3 July 2018, it was mentioned that the Franchise Segment will formally replace the Export Segment from 2H2018 onwards. In the last weeks of June 2018, the Franchise Segment recorded prelude revenues of $0.8 million as the Group’s China subsidiary, Best World (China) Pharmaceutical (BWCP), commenced sales of certain SKUs to several franchisees………………
 
As at 30 June 2018, there are 27 franchisees that our China subsidiary had entered into agreement with.
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China Franchise Revenue (SGD m)
1Q2018 =    0
2Q2018=    0.841 (Franchisees = 27 ; BWL Lifestyles Centres = ?) 
3Q2018 = 60.486  (Franchisees = ?   ; BWL Lifestyles Centres = ?)
 
Without the BT article by Marissa Lee, it appears that the list of BWL Lifestyles Centres location would probably remain a secret…………………………..
 
Do the Management NOT have the intention to disclose them in the first place?
 
Do the Management think they do not have the obligation to disclose them?
 
Do the management think they have the right NOT to disclose them?
 
Willingly or reluctantly, they have made the disclosure but only after being “queried publicly” by BT’s article, it appears ……………….
 
That doesn’t look good on the Management, does it ?
 
DBS Vickers suspended coverage after the 2Q2018 results……………
 
With benefits of hindsight, they should have address the concerns raised by DBS Vickers after the 3Q2018 results announcement but they didn’t ……………..
 
Had they have done so, HISTORY could have played out differently……………..
 
Question remains: Have their Clarification report (15 pages) adequately addressed those concerns and issues raised by BT ? Which include:
- it is challenging to figure out just how and where those sales are taking place,
- Analysts who engage in fundamental analysis to evaluate the stock's intrinsic value have found key data hard to find or verify.
- Investors trying to independently verify the popularity of DR's Secret in China are therefore left trying to make sense of data points that suggest an unimpressive online and offline footprint for what is supposedly a fast-growing skincare brand.

(11-08-2018, 09:36 AM)Boon Wrote: The “China Wholesale Model” deliberately created disappeared in thin air just like that …….................................Ha-ha!
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FY2017 Results Announcement:
 
“As mentioned previously, the Group is in preparation for the conversion of the Export segment to Direct Selling”………………..(Section 8 ; page 16)
 
“As previously announced, conversion of the Export business to Direct Selling shall be implemented in phases. Management expects first phase conversion to commence during the first half of FY2018. Revenue from the Export Segment may decline during the course of conversion, as the Group will concurrently export to the Export Agent and our China subsidiary;”…………….(Section 10 ; page 19) 
                  
“For 1H2018, exports to China may be categorised as China Wholesale as we will be importing China orders through our China subsidiary, Best World (China) Pharmaceutical Co., Ltd (formerly known as Best World (Zhejiang) Pharmaceutical Co., Ltd.); “…………………….(Section 10 ; page 19)
 
AR2017 page 12:
 
“For FY2018, while the Group’s China management continue to work with our distributors to set up more BWL Experience Centres in various cities located throughout China where we already have established good market presence, we will also progressively convert our current export model in China to a new business segment, otherwise known as China Wholesale. Given that direct selling business model in China is unique to the country, we deliberately created this segment to differentiate it from the Direct Selling we practice in all other markets”
 
1QFY2018 Results Announcement:

“In line with management’s commentary in Section 10 of the Group’s last results announcement, Group Revenue for 1Q2018 was 43.3% lower compared to the same period last year, primarily due to minimal export to China as the Group commenced its conversion from the Export segment to the new China Wholesale segment.”………………………..(Section 8 ; page 12)
 
“In line with the last results announcement, the Group took its first step in converting the Export segment into the new segment of China Wholesale in 1Q2018.During the……………..(Section 8 : page 13)
 
“As explained above, as a result of delayed revenue recognition, revenue from China declined 68.2% in 1Q2018 vis-à-vis the same period last year as the Group entered into a transition for the conversion of the Export segment into the new segment of China Wholesale”………………(Section 8 ; page 14)
 
“Although the Group’s top and bottom line has been impacted in 1Q2018 due to the conversion of its business model from Export to China Wholesale and since actual demand for the Group’s brand offerings in China is still growing, barring any unforeseen circumstances, management is cautiously optimistic that the China Wholesale segment will contribute to the growth in the bottom line for the Group in 2H2018.”……………………………(Section 10 ; page 15)
 
2QFY2018 Results Announcement:

“In line with Section 10 of the Group’s 1Q2018 Results Announcement, the Group’s transition to the new Franchise Segment in China extended into 2Q2018, resulting in lower Export Segment revenue as compared to 2Q2017. Group revenue for the reporting period ended 30 June 2018 declined 39.6% vis-à-vis the same period last year primarily due to the aforesaid transition which delays revenue recognition to 2H2018”………………….(Section 8 ; page 13)
 
“As mentioned previously, due to the transition towards the new Franchise business segment resulting in delayed revenue recognition, revenue from China decreased from $26.6 million in 2Q2017 to $6.2 million in 2Q2018”………………….(Section 8 ; page 16)
 
“The completion of 1H2018 marks a new milestone for the Group’s China operations with the commencement of the Franchise Segment which replaces the Export Segment from 2H2018 onwards.”,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,(Section 10 ; page 18)
 

15-Page Clarification report: page 4
 
Accordingly, the Company announced its intention to transition to the Franchise Model in May 2018 (at that time referred to as the “China Wholesale segment”) . However, to avoid confusion with the Group’s Manufacturing/Wholesale Segment in China of the Group’s “Aurigen” Products, the term “China Wholesale segment” was later changed to “Franchise segment”, which also more accurately reflected the Group’s legal relationship with the Franchisees in China.
 
15-Page Clarification report: page 12
 
The term “Franchise Model” was adopted by the Company to refer to the Group’s distribution model for premium skincare Products in China for the purpose of reporting, and should not be interpreted narrowly. The term was used in replacement of the term “China Wholesale”  due to its similarity to the Manufacturing/Wholesale Model used for “Aurigen” ([font=ＭＳ 明朝]全金) Products.[/font]
 
The Franchise Model developed by the Group incorporates elements of authorised
distributorship and franchise arrangements, where the Group sells the Products to the Franchisees, and the Franchisees on-sell these Products to consumers. The term “Franchise Model” was adopted as it describes the franchise elements of the arrangements, under which the Franchisees may only sell the Products (to the exclusion of other brands) and are permitted to use the Group’s trademarks in operating BWL Lifestyle Centers, as well as comply with the Group’s brand standards and operating manuals.

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Can one make sense of what they are saying ?

(11-03-2019, 12:23 PM)Boon Wrote:

(11-08-2018, 09:36 AM)Boon Wrote: The “China Wholesale Model” deliberately created disappeared in thin air just like that …….................................Ha-ha!
______________________________________________________________________________________________________________
 
FY2017 Results Announcement:
 
“As mentioned previously, the Group is in preparation for the conversion of the Export segment to Direct Selling”………………..(Section 8 ; page 16)
 
“As previously announced, conversion of the Export business to Direct Selling shall be implemented in phases. Management expects first phase conversion to commence during the first half of FY2018. Revenue from the Export Segment may decline during the course of conversion, as the Group will concurrently export to the Export Agent and our China subsidiary;”…………….(Section 10 ; page 19) 
                  
“For 1H2018, exports to China may be categorised as China Wholesale as we will be importing China orders through our China subsidiary, Best World (China) Pharmaceutical Co., Ltd (formerly known as Best World (Zhejiang) Pharmaceutical Co., Ltd.); “…………………….(Section 10 ; page 19)
 
AR2017 page 12:
 
“For FY2018, while the Group’s China management continue to work with our distributors to set up more BWL Experience Centres in various cities located throughout China where we already have established good market presence, we will also progressively convert our current export model in China to a new business segment, otherwise known as China Wholesale. Given that direct selling business model in China is unique to the country, we deliberately created this segment to differentiate it from the Direct Selling we practice in all other markets”
 
1QFY2018 Results Announcement:

“In line with management’s commentary in Section 10 of the Group’s last results announcement, Group Revenue for 1Q2018 was 43.3% lower compared to the same period last year, primarily due to minimal export to China as the Group commenced its conversion from the Export segment to the new China Wholesale segment.”………………………..(Section 8 ; page 12)
 
“In line with the last results announcement, the Group took its first step in converting the Export segment into the new segment of China Wholesale in 1Q2018.During the……………..(Section 8 : page 13)
 
“As explained above, as a result of delayed revenue recognition, revenue from China declined 68.2% in 1Q2018 vis-à-vis the same period last year as the Group entered into a transition for the conversion of the Export segment into the new segment of China Wholesale”………………(Section 8 ; page 14)
 
“Although the Group’s top and bottom line has been impacted in 1Q2018 due to the conversion of its business model from Export to China Wholesale and since actual demand for the Group’s brand offerings in China is still growing, barring any unforeseen circumstances, management is cautiously optimistic that the China Wholesale segment will contribute to the growth in the bottom line for the Group in 2H2018.”……………………………(Section 10 ; page 15)
 
2QFY2018 Results Announcement:

“In line with Section 10 of the Group’s 1Q2018 Results Announcement, the Group’s transition to the new Franchise Segment in China extended into 2Q2018, resulting in lower Export Segment revenue as compared to 2Q2017. Group revenue for the reporting period ended 30 June 2018 declined 39.6% vis-à-vis the same period last year primarily due to the aforesaid transition which delays revenue recognition to 2H2018”………………….(Section 8 ; page 13)
 
“As mentioned previously, due to the transition towards the new Franchise business segment resulting in delayed revenue recognition, revenue from China decreased from $26.6 million in 2Q2017 to $6.2 million in 2Q2018”………………….(Section 8 ; page 16)
 
“The completion of 1H2018 marks a new milestone for the Group’s China operations with the commencement of the Franchise Segment which replaces the Export Segment from 2H2018 onwards.”,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,(Section 10 ; page 18)
 

15-Page Clarification report: page 4
 
Accordingly, the Company announced its intention to transition to the Franchise Model in May 2018 (at that time referred to as the “China Wholesale segment”) . However, to avoid confusion with the Group’s Manufacturing/Wholesale Segment in China of the Group’s “Aurigen” Products, the term “China Wholesale segment” was later changed to “Franchise segment”, which also more accurately reflected the Group’s legal relationship with the Franchisees in China.
 
15-Page Clarification report: page 12
 
The term “Franchise Model” was adopted by the Company to refer to the Group’s distribution model for premium skincare Products in China for the purpose of reporting, and should not be interpreted narrowly. The term was used in replacement of the term “China Wholesale”  due to its similarity to the Manufacturing/Wholesale Model used for “Aurigen” ([font=ＭＳ 明朝]全金) Products.[/font]
 
The Franchise Model developed by the Group incorporates elements of authorised
distributorship and franchise arrangements, where the Group sells the Products to the Franchisees, and the Franchisees on-sell these Products to consumers. The term “Franchise Model” was adopted as it describes the franchise elements of the arrangements, under which the Franchisees may only sell the Products (to the exclusion of other brands) and are permitted to use the Group’s trademarks in operating BWL Lifestyle Centers, as well as comply with the Group’s brand standards and operating manuals.

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Can one make sense of what they are saying ?

15-Page Clarification report: page 4
 
Accordingly, the Company announced its intention to transition to the Franchise Model in May 2018 (at that time referred to as the “China Wholesale segment”). However, to avoid confusion with the Group’s Manufacturing/Wholesale Segment in China of the Group’s “Aurigen” Products, the term “China Wholesale segment” was later changed to “Franchise segment”, which also more accurately reflected the Group’s legal relationship with the Franchisees in China.
 
15-Page Clarification report: page 12 
Footnote 6:
6 The term “China Wholesale” was used in the Company’s announcement dated 14 May 2018 of
its financial results for the 1Q2018.
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It was shown in my thread above that the term “China Wholesale” have been mentioned at least 5 times in 1Q2018 results announcement. 
 
The Company is now saying “this should be construed as the Company had made announcement in its intention to transition to the Franchise Model in May 2018, at that time referred to as “China Wholesale”.
 
Ha-ha ! It is a JOKE, isn’t it…………………………….. 

How about the term used in AR2017 and FY2017 results announcement? Same interpretation?

What is the primary roles and responsibilities of an ID ?
 
Engaging a “trainee ID” to tap his “other experience” doesn’t sound right to me.............., does it ?  
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Any prior experience as a director of an issuer listed on the Exchange?
 
No
 
If no, please state if the director has attended or will be attending training on the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange
 
Best World International Limited will arrange for Mr Fong Chester Po Wai to receive relevant training on the roles and responsibilities of a director of a listed company in Singapore.
 
http://www.bestworld.com.sg/ir-announcements.html

(12-03-2019, 12:32 PM)Boon Wrote: What is the primary roles and responsibilities of an ID ?
 
Engaging a “trainee ID” to tap his “other experience” doesn’t sound right to me.............., does it ?  
_____________________________________________________________________________________________________________

Any prior experience as a director of an issuer listed on the Exchange?
 
No
 
If no, please state if the director has attended or will be attending training on the roles and responsibilities of a director of a listed issuer as prescribed by the Exchange
 
Best World International Limited will arrange for Mr Fong Chester Po Wai to receive relevant training on the roles and responsibilities of a director of a listed company in Singapore.
 
http://www.bestworld.com.sg/ir-announcements.html

ID serve as an important check and balance in companies. Their roles in listed companies is becoming increasingly critical in ensuring that companies stay above and beyond any mismanagement. 
 
Are “trainee IDs” be allowed to be appointed BEFORE even completing proper training in the first place?
 
If “YES”, can they be expected to competently discharge their duties accordingly?
 
If “NO”, ………………(I would leave it to your imagination)
 
Without digging deeper into the rule books, either way, to me, it is a JOKE………………………..

15-Page Clarification : Page 1

 The Group has developed four distinct distribution channels that it believes best serves the
markets where the Group’s products (“Products ”) are distributed. The chart below shows the
different distribution channels employed by the Group in the markets in which it operates as at
the date of this announcement (this “Announcement ”).

What do the chart on page 1 of the clarification report show? Distribution channels ?
_____________________________________________________________________
What is a Distribution Channel ?

A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. It can include wholesalers, retailers, distributors, and even the internet. Channels are broken into direct and indirect forms: A direct channel allows the consumer to buy the good from the manufacturer, and an indirect channel allows the consumer to buy the good from a wholesaler or retailer.

https://www.investopedia.com/terms/d/dis...hannel.asp

Distribution Channels:
 




[Image: mkt3-5.2.png]
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Definition: Channel Levels

Channel level refers to the intermediary in marketing distribution channel between the producer/manufacturer and the end consumer. Every channel level plays a role in making the good available to the end consumer. The number of channel levels between the producer and consumer could be 0,1,2,3 or more.

A zero level channel is a direct marketing channel where there is no intermediary and the producer sells directly to the consumer. For example – direct mails, telemarketing etc

A one level channel has one intermediary, typically a retailer between a manufacturer and consumer. 

Similarly a 2 level channel and a 3 level channel have 2 and 3 intermediaries respectively.

https://www.mbaskool.com/business-concep...evels.html

Hi Boon,



Best World Franchise is quite unique:
1. they are counted as customers of the Group (aka not retailer)
2. they are required to set up Lifestyle Centers
3. they will also conduct workshops
4. they will sell to salons, spas, beauty centers, retail outlets and also end customer

Because of these definition of Franchise,
we can deduced that what ever Franchisee do, 
Best World does not have real control over the Franchisee.
Franchisee is nothing but their customer (with some obligation to buy from BWL).

Of course, when things happened, how can Bestworld rescue itself?

Page 2:
“Pursuant to the franchise agreements entered into between the Group and each Franchisee, the Franchisees purchase the Products from the Group for distribution through BWL Lifestyle Centres to end consumersand independent third parties who operate salons, spas, beauty centres and other retail outlets (“Workshops”).Some Workshops are also licensed to use the Group’s brands and trademarks in selling the Products to other consumers in China……………”.
 
The Group also actively works with Franchisees to manage the Workshops, with a view to ensuring that the set-up of these stores and the quality of services they provide to consumers are consistent with the Group’s brand standards.
 
Page 6: 
Under the Franchise Model, the Group sells premium skincare and certain other Products to its 33 Franchisees. The Franchisees are independent third parties who operate BWL Lifestyle Centers and who purchase the Products from BWL China as principals and exclusively on-sell the Products to consumers and Workshops
 
Page 7:
Social media platforms and applications are used by the Franchisees and Workshops to disseminate beauty and wellness related content, product information and marketing messages as part of the Group’s marketing strategy. Potential customers who view such social media content and would like to find out more about the Group’s premium skincare Products or make purchases can visit BWL Lifestyle Centers and/or Workshops
 
Page 7:
The Group recognises revenue upon delivery or completion of the sale to the Group’s direct customers. These direct customers under the Franchise Model are the Franchisees. The Franchisees purchase the Products directly from the Group, and on-sell these Products to end consumers as well as Workshops.
 
Page 10:
The Group does not directly conduct any sales transactions in China through online stores or social media, including Taobao. The Products are primarily distributed in China by Franchisees directly to consumers through BWL Lifestyle Centers in China
___________________________________________________________________________________________________________
 
Hi Chialc88,
 
Oxford Ductionary defines “Workshop” as 
 
A.    a PLACEin which goods are manufactured or repaired  (Meaning A)
B.    a MEETINGat which people gathered and engage in intensive discussion and activity on a particular subject or project. (Meaning B)
 
BWI has adopted the term “Workshops”to be
C.    “salons + spas + beauty centers + other retail outlets”. (Meaning  C)
 
“Workshop with meaning A” is irrelevant.
 
“Workshop with meaning B” is relevant – as you have said - they do conduct “MEETING”
 
Knowing that “Workshops with Meaning B” is relevent, why create ANOTHER “Workshop with Meaning C” ? 
 
“Workshops with meaning C” = “salons, spas, beauty centres and other retail outlets”
 
Wouldn’t “Retail Establishments” or “Retail Premises”a better term for “salons, spas, beauty centres and other retail outlets”?
 
To CONfuse or to CONvince ?
______________________________________________________________________________________________________ 
 
How do “products” ultimately reached “end consumers” under its so called “Franchise Model” ?
 
1)     Through “BWL Lifestyles Centers” operated by “Franchisees” => Distribution Channel ONE (DC ONE)
2)     Through “Workshops with meaning C” => Distribution Channel TWO (DC TWO)
 
Distribution Channel ONE (DC ONE):
Producer (BWL China) => Retailer ONE (Owners & Operators of BWL Lifestyles Centers) => End Consumers ONE
 
Distribution Channel TWO (DC TWO):
Producer (BWL China) => Wholesaler TWO => Retailer TWO (Owners & Operators of “Workshops with meaning C” => End Consumer TWO
 
In terms of type of “Distribution Channel” :
DC ONE is a ONE-Level DC (it has ONE intermediary in between the Producer and the End Consumer)
DC TWO is a TWO-Level DC (it has TWO intermediaries in between the Producer and the End Consumer)
  
From the perspectives of End Consumers, who can only see “Retail outlets”, to them, it is a “retail model”.
 
Can quality of services provided to consumers be consistent with the Group’s brand standards at ALL outlets ?
 
Not if these products are available through multi-tiers “Retail Premises" of different and inconsistent standards” – at least from the perspective of selective use of trademarks and logo in the sales of products and “brands exclusivity alone.
-       BWL Lifestyles Centers – WITH BWL trademark and logo that exclusively sell the brands of the group only
-       Some Workshops (with meaning C) – WITH BWL trademark and logo that also sell other brands
-       Some Workshops (with meaning C) – WITHOUT BWL trademark and logo that also sell other brands.
 
From the perspective of “Channel Design”using Marketing Mix of 4Ps or 7Ps, “Place” has been poorly conceived, IMO.
 
https://en.wikipedia.org/wiki/Marketing_mix
 
Here is another P :

 "what makes a skin care brand "Premium" ?  

Good morning valuebuddies.
Wish everyone a happy and happening investment journey in BWL.

pwc is appointed as reviewer for Franchises model
as expected, pwc objectives and scope is confined to BWL and its Franchisees (customer actually).

link to sgx on pwc scope

Workshop covered?

(19-03-2019, 10:44 PM)chialc88 Wrote: Good morning valuebuddies.
Wish everyone a happy and happening investment journey in BWL.

pwc is appointed as reviewer for Franchises model
as expected, pwc objectives and scope is confined to BWL and its Franchisees (customer actually).

link to sgx on pwc scope

Workshop covered?

Just want to highlight that its PwC CONSULTING that's engaged.