Best World

[Boon]

Boon, what is the fair value of BWL?

Hi Robert,
 
Strictly speaking, it should be the share price of BWI (Best World International Ltd) we are talking about and not BWL (Best World Lifestyle), the subsidiaries. I did make the same mistake too. Ha-ha!
 
So, What is the fair value of BWI? 
 
It could be SGD 1.50 or SGD 15 cents per share depending on one’s input assumption in the valuation model – especially on future earnings growth estimates that are highly subjective.
 
I do not have a crystal ball that says 41 cents or at whatever price is the fair value but I am hoping that revenue and NPM could be sustained at above SGD 100 m and 10% respectively over the next 5 years if not longer – even without a DS license in China being granted.
 
Of course, if a DS license in China could be granted soon, share price at SGD 41 cents is considered undervalued, IMO.  
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[Boon]

With its cash position amounting to SGD 47.2 million and with no debt, as at end of 31 Dec 2015, I wonder how much of it could be considered as “excess cash” which could be returned to shareholders or be deployed or invested to generate higher return.
 
4.8% return on bond investment doesn’t sound too bad, but only SGD 1.99 million had been invested.  
 
No doubt, higher cash level makes the balance sheet looks stronger, but sitting on excess cash by keeping them in the bank can be an expensive luxury because it has an opportunity cost.
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http://infopub.sgx.com/FileOpen/2016%200...eID=393657
 
RESPONSE TO SGX-ST QUERY ON RESULTS ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
 
The Board of Directors of Best World International Limited (“the Company”) refers to the queries raised by Singapore Exchange Securities Trading Limited (“SGX-ST”) on the Results Announcement for the year ended 31 December 2015 and wishes to provide further information as follows:
 
SGX’s queries
 
We note that the Group had recorded an investment in other financial asset of S$ 1.99 million. Please disclose the nature of the investment including details of its maturity date and returns.
 
Company’s response
 
Other Financial Assets consist of long term investment in several bonds, with value-weighted average maturity and return of approximately 3.7 years and 4.8% respectively.
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[Boon]

The slide presentation on the left hand side of the photo is an interesting one. It shows the growth plan of BWL Taiwan over the next 5 years.
 
Taiwan Market Revenue
FY2014 (actual) = TWD    530 m  (~ SGD 22.7 m)
FY2015 (actual) = TWD 1,280 m  (~ SGD 59.4 m)
FY2016 (target) = TWD 1,800 m  (~ SGD 75.0 m)
………………………….
Annual growth rate of > 50%
………………………..
FY2020 (target) = TWD 10,000 m (~ SGD 416 m)
 
How realistic is this revenue target of TWD 10,000 m by FY2020?
 
Well, so far only one company, Amway, being the No:1 DS company in Taiwan has exceeded this revenue of TWD 10,000 m before in 2013 and 2014 (with the 2015 figures yet to be released). I reckon it is a very aggressive and ambitious plan but not an impossible dream. Growth momentum is still going strong in this market.

That said, I would be equally pleased if BWL Taiwan could achieve its FY2016 target of TWD 1,800 m and revenue starts to decline at 10% per annum from there. Ha-ha! 


[Image: 302c6y9.jpg]

[Boon]

A little bit outdated, nevertheless...............................
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SI RESEARCH: 4 INVESTMENT MERITS OF BEST WORLD INTERNATIONAL

Louis Kent Lee February 26, 2016

http://aspire.sharesinv.com/6236/si-rese...rnational/
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[Boon]

Increasing geographical spread.............................
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ESTABLISHMENT OF A JOINT VENTURE COMPANY IN DUBAI, THE UNITED ARAB EMIRATES (“UAE”) 

http://infopub.sgx.com/FileOpen/BWIL_Ann...eID=384816
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Interestingly, they have to source for a Country Manager to head their UAE/GCC operations - I would have thought the local partner (with 51% stake in the JV) should at least have some internal talents to run the business.  Nevertheless, increasing geographical spreads to capture new markets is certainly a move in the right direction. Let's see what they can achieve in this part of the world down the roads. Can they springboard from there to other nearby markets such as India and Europe markets in the next 3 to 5 years?
https://www.gulftalent.com/uae/jobs/coun...ger-197724 
Country Manager
 
Best World International
Dubai, UAE
 
Posted 10 days ago
Ref: QP849-01

The Role:
- Lead, direct and manage the entire operations of Best World Lifestyle ("BWL") UAE
- Expand the Direct Selling Distributors Network for UAE and other GCC markets.
- Work with top distributors in the development of distribution networks
- Manage distributors to achieve consistent and profitable growth in the sales of BWL products in UAE and other GCC markets
- Account for legal and regulatory compliance in UAE
- Prepare Annual Budget and Annual Business Operation Plan
- Any other duties as and when instructed by your Directors
 
Requirements:
- Degree holder or equivalent
- At least 5 years of hands-on experience in marketing and general management
- Must have working experience in a Direct Selling company
- Ability to work with people from all levels
- Excellent oral and written communication skills in English
- Experience working in UAE will be an added advantage
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[Boon]

http://tw.bwlgroup.com/images/bulletin/2...-04_05.pdf
 
The bi-monthly bulletin of BWL Taiwan has just been released. On page 4 of the bulletin, according to its Country Manager, 1Q2016 revenue for Taiwan is projected to be at around TWD 430 million.
 
TWD 430 m is equivalent to about SGD 18.0 m.
 
1Q2016 revenue of SGD 18.000 m would make it the best ever 1Q revenue and also the second highest ever quarterly revenue for Taiwan.
 
Depending on how well the other markets are doing, if 1Q2016 Group revenue could exceed SGD 25.495 m, then it would be the best ever 1Q revenue for the Group.
 
Further, if FY2016 quarterly group revenue could follow the trends of FY2014 & FY2015 such that 4Q2016 > 3Q2016 > 2Q2016 > 1Q2016 in more or less the same order of magnitude, then FY2016 Group revenue would likely to be at all time high..................………………………
 
TWD 430 m (annualized) => TWD 1720 m => pretty close to TWD 1800 m ~ the FY2016 revenue target of BWL Taiwan.

Taiwan Revenue (SGD million)
1Q2014 =  2.418   (= 11% of FY2014 Revenue)
2Q2014 =   4.157      (= 18% of FY2014 Revenue)
3Q2014 =   4.940      (= 22% of FY2014 Revenue)
4Q2014 = 11.196      (= 49% of FY2014 Revenue)
1Q2015 = 4.465     (=  8% of FY2015 Revenue)
2Q2015 = 10.244      (=  18% of FY2015 Revenue)
3Q2015 =  14.125     (=  25% of FY2015 Revenue)
4Q2015 =  27.559    (=  49% of FY2015 Revenue)
1Q2016 =  18.000    ( Projection)
 
Group Revenue (SGD million)
1Q2014 = 12.802     (= 17% of FY2014 Revenue)
2Q2014 =   18.278      (= 24% of FY2014 Revenue)
3Q2014 =   19.229      (= 26% of FY2014 Revenue)
4Q2014 =   24.957      (= 33% of FY2014 Revenue)
1Q2015 = 13.507     (= 13% of FY2015 Revenue)
2Q2015 =   21.029     (=  21% of FY2015 Revenue)
3Q2015 =   26.191     (=  26% of FY2015 Revenue)
4Q2015 =   40.945     (=  40% of FY2015 Revenue)
1Q2016 =   > 25.495    ( Projection)

Looks like FY2016 is shaping up to be another good year.............
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[Boon]

AR2015 is out.
 
Chairmen’s message (Page 7 to 9 of AR2015) is of interesting read……………………….
 
The setting up of state-of-art skin care manufacturing facilitiy in Tuas is a surprise to me………………………….
 
Key points:
 
1)  “While we continue to grow in the Taiwan market in this financial year, we will also leverage on the experience we have gained in the market and emulate the success in our existing and new markets.”
2)  “Barring any unforeseen circumstances, we believe our (China DS) license could be approved in the next 12 to 16 months, upon which, we will convert our agent and its network of beauty salon owners into our network.”
3)  “Apart fromTaiwan and China, we have also been implementing marketing strategies across our existing markets, notwithstanding the challenges we are facing in some of them……………….. We are cautiously optimistic that the Indonesia market will continue to grow in the latest financial year.……………………………. Moving forward, we believe the new management is on track to end the downward trend of the Malaysian market, especially when the ringgit stabilizes. “
4)  “We are in preparation to set up a state-of-art skincare manufacturing facility in Tuas. Slated for completion next year, this centralized manufacturing facility will enable us to achieve higher economy of scale, contribute to cost savings in freight charges and possibly improve our gross margins. “
5)  “Looking ahead, our main focus is to continue our efforts in developing the China market. While awaiting the approval of our direct selling license, we are picking up the pace of training ourTaiwanese distributors to be ready to engage the network distributors there.”
6)   “On top of that, as shopping behaviours evolves and online shopping is gaining traction by the day, we will also be implementing a B2B platform and digital marketing campaign to further our wholesale/manufacturing business in FY2016. Upon successful implementation, these platforms could crossover to support also our core business of direct selling in existing markets and even new markets. “
7) “On the subject of new markets, we are currently preparing to set up our Dubai Regional Centre (RC). Through the sale of our Halal certified products, we plan to use the Dubai RC to springboard into the other GCC markets of Saudi Arabia, Qatar, Bahrain, Oman and Kuwait, in the next 2 to 3 years. ……………………….”
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[babyblue]

this is an interesting company to look at.

leaving aside my aversion towards direct selling/ mlm companies ( i dont think they do substantive and productive work ) 



the performance of direct selling companies have always been erratic. even for bigger ones like nuskin, amway. it is highly dependent on momentum of the "movement" and the major sales personality that drives the movement.

 share price seems toppish now, even though its revenue is at multi year high. lets take a moment and think with cool heads. as far as i can remember the same story was playing out for Best World not many years back. But sales momentum just disappeared. and as we all know, the share price sank with it. just do a quick google search of its share price performance.

looking forward the only thing that will give a boost will be the direct selling licence in China. But then again, management has been talking about it IRRC since 2013. but i know for sure at least 2014, because that was when it got attention from nextinsight. So its 3 years plus and no progress. Especially in a juridisction like China. I'll say, one will be quite foolish to be optimistic. Most people will have realised by now, that doing traditional businesses in China, especially one that depends on the government, means either you are Local and have Strong connection or you get eaten up. I dont see Best world having strong enough connections to suceed in a big way, even if they could get the license. Thats not even considering the strong Taiwan connections this company has

[mslee888]

attended their AGM this morning.

China business is also expected to do well even they fail to get direct selling license this year for whatever reasons. They have also been going on a road show to raise the company profile with several broking houses like Maybank, CIMB, RHB etc.

Share Price seems high for now with more investors taking note of this stock.

Lets see if 2016 will pan out well for all vested.

Vested

[Boon]

https://brokingrfs.cimb.com/RnfRQyU0MKM3...eVhsg2.pdf

CIMB initiated coverage on BWI with an ADD and a TP of SGD 0.97 (without a China DS license) 
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