Best World

[chialc88]

I benefited tremendously from your contributions.
Really appreciate all your help to identify an excellent company.

I recognised that BWL is going through a very difficult time.
Dora, Doreen and HBC is trying their best to navigate the complex China Direct sell (DS) market.

Franchise model, most likely formulated as they understood the challenges to push forward with DS.
Definitely not their choice to give up on DS, if only they can see some meaningfully way to benefits from DS in China context.

It's tough operating in China.
宝贝加油!

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Let's see some quotable quotes from yesterday result announcement:

Notwithstanding the foregoing, demand for our products continues to grow in China.
The aggregate SKUs sold to our franchisees in 1H2018 is significantly higher than the SKUs
sold by our agent to the DR’s Secret Experience Centers in 1H2017, consistent across all of
our core products.

With market demand for the Group’s products in China being stronger than before and with
contribution from the Group’s operations in Taiwan, Indonesia, Hong Kong and Singapore,
barring any unforeseen circumstances, the management is still cautiously optimistic that the
Group will be able to register bottom line growth for FY2018, despite having recorded lower
revenue during the transition phase in 1H2018.

... agent in China has remaining inventory which is expected to be completely
depleted by mid-3Q2018. As such, Revenue from Franchise Segment in 3Q2018 does
not fully represent the financial performance of our China business for the entire
quarter...

Summary:
1. Revenue will be lower in FY18 compare to FY17 due to revenue recognition
2. Bottomline (profit) growth will be comparable (same) to FY17.


Extracts:
1. Revenue drop significantly
2. Gross profit and net profit drop significantly
3. EPS drop significantly
4. However, Gross profit margin and Net profit margin is growing
5. Cash at 90m is growing
6. Dividend of 1.2 cents is lower (compare to 1.5cents last year)
7. Inventory is building up as there should be zero export model in China
8. Trade receivable drop significantly due to payment received

Overall, BWL numbers is in tact and we need to wait for a longer time to reap benefits of DS.
And, of course, unlikely Franchise will replace DS, right?

Anyway, since, it's Singapore National Day, let me wish all valuebuddies a peaceful holiday.