Best World

[CY09]

Instead of Change.org, I have just written to SGX regco to ask them to look into it. Based on my past correspondence with them, writing about Sky China Petrol and Sino Grandness, SGX Regco has done nothing. So dont pin your hopes up too much.

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To SGX Regco,

I would like to flag one company by the name of Best World International. I am not a shareholder but am writing in the interest of investor protection/rights and urge SGX regco to take action.

The company has been delisted by SGX as SGX did not feel comfortable with its business model in China. While the company made efforts to pay its shareholders during its first few years of suspension, Best World has since stopped paying dividends to its shareholders. This despite the company recording record net profits and growing amount of cash generated. On the contrary, over the past 2 years, remuneration to its executive directors has been generous. For example co-chairman, Group Ceo, Dora Hoan has received an increase in remuneration from $4.75million (AR 2018) to $12.25 million.(AR 2020)

Best World audited results shows business is cash flow generative and they do not have an urgent need for cash because the Tuas plant is fully built with minimal CAPEX outlay and a net cash position of $390 Million with no debt as of 1HFY2021.

I understand it was SGX who suspended the company, however, the company has used this opportunity to increase remuneration to executive directors and not pay dividends to shareholders.

Existing shareholders are not able to realise the value of their shares of this profitable company due to no dividends received; while at the same time, the executive directors are increasing their remuneration through increased bonuses.

With the licenses of direct selling in China being unlikely to be granted to Best World International within these 2 years (thus allowing them to be re-listed), I urge SGX regulators to consider two approaches to help public minority shareholders: (i) Direct the executive directors who are majority shareholders to offer a fair takeover price for the remaining shares or (ii) SGX regco allows the company to be re-listed from suspension.

For (i), Best World is highly profitable and it is definitely possible to do a leveraged buyout. Best World net profits are $134 million with cash flow generated of $125 million (accounting for working capital changes and cash outflow due to investing activities/taxes). With the directors holding a majority stake of 50%, it is inconceivable that no banks/funds will lend them s$500 million to buy off the remaining public float stake; unless the audited results are frauds. The company can even tap on its cash reserves of s$390 million to buy off the remaining 50% stake in a leveraged buyout situation.

I look forward to SGX Regco actions towards this company. Thank you.

[dreamybear]

Thanks so much CY09 for writing in even though you are not a shareholder.   I am amazed you can write so succinctly in such a short time, it would have taken me at least a day and of a poorer standard.

I had written to RegCo previously and so kinda know what to expect. Even if nothing, it is very welcome moral support. Hope I can buy you a meal some day.

On privatization, I had previously worked out the math too, yes it is not really a taller order for the directors to privatise, more so given its stellar results this year barring unforeseen circumstances. 
https://www.valuebuddies.com/thread-1033...#pid162093

Then again, I came across the Eastern Hldgs' thread. Cld the directors be facing funding challenges if they are unable to pledge their shares due to the suspension status ?
https://www.valuebuddies.com/thread-123-...l#pid49612

At the same time, it is also unclear if the directors are willing to partner with a 3rd party for a buyout.

At the end of the day, I think what was lacking all this time was a clear timeline to resolve the suspension, be it resumption or privatization.

As previously discussed in this forum, while BW is allowed to conduct its business legally in China by the Chinese authorities, there are SGX listing issues with it. To some shareholders and myself, we view the choice of the China business model as a business decision, i.e. BW, as a business entity, had made a commercial decision to adopt the franchise model in China, which based on advice sought from professional advisors/law firm that the model is compliant with applicable laws and regulations*. 

Shouldn't it be best left to the market to determine the value / risk-reward of the business(business model) ? Isn't that what equity investing is all about ?   

SGX RegCo: Introducing Listing Compliance 
https://www.youtube.com/watch?v=kEGIzyjh_KQ 

* Para 3.3 pg5
https://bestworld.listedcompany.com/news...S4D7.1.pdf

[Shiyi]

Instead of Change.org, I have just written to SGX regco to ask them to look into it. Based on my past correspondence with them, writing about Sky China Petrol and Sino Grandness, SGX Regco has done nothing. So dont pin your hopes up too much.

------------------------------------------------------
To SGX Regco,

I would like to flag one company by the name of Best World International. I am not a shareholder but am writing in the interest of investor protection/rights and urge SGX regco to take action.

The company has been delisted by SGX as SGX did not feel comfortable with its business model in China. While the company made efforts to pay its shareholders during its first few years of suspension, Best World has since stopped paying dividends to its shareholders. This despite the company recording record net profits and growing amount of cash generated. On the contrary, over the past 2 years, remuneration to its executive directors has been generous. For example co-chairman, Group Ceo, Dora Hoan has received an increase in remuneration from $4.75million (AR 2018) to $12.25 million.(AR 2020)

Best World audited results shows business is cash flow generative and they do not have an urgent need for cash because the Tuas plant is fully built with minimal CAPEX outlay and a net cash position of $390 Million with no debt as of 1HFY2021.

I understand it was SGX who suspended the company, however, the company has used this opportunity to increase remuneration to executive directors and not pay dividends to shareholders.

Existing shareholders are not able to realise the value of their shares of this profitable company due to no dividends received; while at the same time, the executive directors are increasing their  remuneration through increased bonuses.

With the licenses of direct selling in China being unlikely to be granted to Best World International within these 2 years (thus allowing them to be re-listed), I urge SGX regulators to consider two approaches to help public minority shareholders: (i) Direct the executive directors who are majority shareholders to offer a fair takeover price for the remaining shares or (ii) SGX regco allows the company to be re-listed from suspension.

For (i), Best World is highly profitable and it is definitely possible to do a leveraged buyout. Best World net profits are $134 million with cash flow generated of $125 million (accounting for working capital changes and cash outflow due to investing activities/taxes). With the directors holding a majority stake of 50%, it is inconceivable that no banks/funds will lend them s$500 million to buy off the remaining public float stake; unless the audited results are frauds. The company can even tap on its cash reserves of s$390 million to buy off the remaining 50% stake in a leveraged buyout situation.

I look forward to SGX Regco actions towards this company. Thank you.

Not only Dora Hoan, her partner Doreen Tan also collects $12.25 million in the last financial year. What can Regco do? Not much, I guess. But retail shareholders ought to know.

[header]

Tks CY09. Totally agree with you! Just to point out actually the shares are suspended from traded and not delisted. SGX Regco should also direct the BW's Remuneration Committee to disclose and justify all the details of BW's key mgmt, including their KPIs. Since SGX does not allow the shares to be traded, they should step in on behalf of the minorities shareholders to ask the Directors difficult Qs. Only with some pressure, the controlling shareholders will feel it is worth privatising the company.

[¯|_(ツ)_/¯]

@cy, BWL is suspended and not delisted. 

Although I had sold all my BWL shares, I still think that BWL is a good company.  The financial results are good and should continue to generate increasing revenue in profits.  It's balance sheet is strong and should remains stronger with more cash piled up every Qtr.  Founders and management team has a clear vision and able to assemble a great team creating values for it's customers/consumers.  

Nothing had change much for BWL, except:
1. It stopped dividend
2. It is suspended

Being a good company does not means it will not make mistake.  BWL make great mistake and it's paying it's price now.  Since I'm not vested, my job is to watch carefully for BWL to make correction and when the time is right, vested again (because, it's a good company to me).

The online petition or non-shareholder writing to SGX Regco to launch a complaint might be what it takes for BWL to resume trading.  If this happened, then I will be the first person to buy some BWL.  My thinking is very simple.  With the suspension, there will be a lot of shareholders wanted to get out.  When the suspension is lifted, the stocks should dropped quickly below last trading price of $1.36.  How much lower, nobodies know, but I will definitely scoop up a little bit.  

Could the reverse happen aka not too many shareholders exiting but there is a rush to buy more BWL stocks?  This is possible but an unlikely scenario.  And, if it happen, I will just stay sideline and wait for the gravity to take place before vested again.  The gravity I'm referring to is the no dividend (and D2 getting $10m pay). 

In all cases, wish BWL continue to prosperous and wish all valuebuddies a successful investment journey.


https://drive.google.com/open?id=1-22Gj9...5ckbA7PplL
Gratitude.

[kelvesy]

Dear CY09, thank you for initiating this and I believe many long-suffering shareholders would appreciate you a lot.

Despite being suspended, Best World has been compounding its intrinsic value. I believe the stock could be worth $5 to $6 today. A suspended stock means investors cannot liquidate it for their needs and SGX should consider it from the point of view of many investors. Perhaps, some of them require the money to buy an apartment, for their retirement funds, etc.

I run an investing community called the Growth Investing Community. We focus on growth stocks and we have >800 members. We will support your petition and please let us know how we can do to help or raise more awareness.

It has been too long and something ought to be done.

[CY09]

Hi Kelvesy,

Thanks for the support. If you wish to help, it will be good if an email be sent to SGX Regco (representing Growth Investing Community) to petition specifically to Best World International. It can be done in the capacity of either (i) representing some of your community who are Best World Shareholders or (ii) as non shareholder, such as I, who wrote in the interest of the investing community.

If enough volume is received, the head of SGX feedback will take note. You may wish to amend from my initial version factoring the inputs of other VB member (i.e. "Best World is suspended and not de-listed") to improve the factual accuracy of the email that will be sent in the capacity of your investing community.

[kelvesy]

Do you have their email? I will DM u.

[DCF]

Hi Kelvesy,

Thanks for the support. If you wish to help, it will be good if an email be sent to SGX Regco (representing Growth Investing Community) to petition specifically to Best World International. It can be done in the capacity of either (i) representing some of your community who are Best World Shareholders or (ii) as non shareholder, such as I, who wrote in the interest of the investing community.

If enough volume is received, the head of SGX feedback will take note. You may wish to amend from my initial version factoring the inputs of other VB member (i.e. "Best World is suspended and not de-listed") to improve the factual accuracy of the email that will be sent in the capacity of your investing community.

I'm sure many will support. Asking Regco to let BWL delist is one option, but a better one will be for Regco to let BWL resume trading, and Regco to be open and transparent in the suspension and lifting process, stick to what the Head of Regco said in the video - they do not regular commercial decision. How BWL want to play in China is a commercial decision!

If the moderator can start a petition, happy to get my fellow investment community to support. Thanks in taking a lead!

[ghchua]

Hi DCF,

There is no point asking Regco to let BWL to delist. Who is going to give the exit offer? Or delist without any exit offer? Isn't that will be in a much worse situation? What about those current short positions in BWL? Who is going to buyback shares for them to close out their open positions? What about those BWL shareholders who had lent out their shares before suspension? How are they going to get back their shares to accept the delisting offer? (if there is one)

My point is that there is no offer currently on the table for BWL, not even from the controlling shareholders. Because of all the mess above that I have listed out, it will be a nightmare situation for any party to attempt a takeover offer for BWL shares. Furthermore, the shares have been suspended for quite sometime. There is no benchmark to make a serious takeover attempt from anyone.

As for resumption of trading, I think SGX had listed a list of conditions for them to meet in order to resume trading. Besides the business model, unfortunately, the auditor also gave a disclaimer of opinion on their accounts. The shares cannot resume trading if the accounts cannot be relied upon with a disclaimer. Yes, the company had came out and clarify those findings by independent reviewer on their China business model, but the auditor still refused to give a clean audit opinion.