Best World

[idyllic_yawster]

People @ NextInsight are bullish on Best World....

http://www.nextinsight.net/index.php/for...=366#21212

[Boon]

According to the December 2014 bulletin of BWL (Taiwan), its October 2014 monthly sales revenue reached a new record high of close to TWD 100 million. It looks like the Taiwanese market would contribute significantly to the 4Q2014 and FY2014 results of Best World. Looking forward to the result announcement next month - should be a reasonably good set of results, IMO.

http://tw.bwlgroup.com/images/bulletin/2...-12_01.pdf

Revenue of Taiwan Market (SGD million)
1Q2013 = 2.498
2Q2013 = 2.553
3Q2013 = 2.674
4Q2013 = 5.484 (FY2013 = 13.209)
1Q2014 = 2.418
2Q2014 = 4.157
3Q2014 = 4.940 (9M2014 = 11.515)
Projection:
October 2014 = around 4.000 (Assuming TWD 100 million ; SGD = 25 TWD)
November 2014 = ?
December 2014 = ?
4Q2014 = minimum of around 4.000 ; final figure = ?????
FY2014 = minimum of around 15.515 ; final figure = ?????
10M2014 already surpassed that of FY2013
4Q2014 likely to surpass that of 4Q2013 & 3Q2014

It would be interesting to see what the final figures would be !
It looks like Best World could still grow even without having obtained its DS license in China.

(vested)

[namralk]

BWL Taiwan did TWD530million for FY14. (about SGD22.5M). Taking out Q1, 2 & 3, Q4 revenue approaches SGD10.5m for Taiwan? Next year target is TWD750M (SGD32M).

FY13 Target was TWD300M (met), FY14 Target was TWD500M (met), FY15 Target is TWD750M (achievable?)

https://www.facebook.com/pages/BWL-Taiwa...81?fref=nf

[Boon]

BWL Taiwan did TWD530million for FY14. (about SGD22.5M). Taking out Q1, 2 & 3, Q4 revenue approaches SGD10.5m for Taiwan? Next year target is TWD750M (SGD32M).

FY13 Target was TWD300M (met), FY14 Target was TWD500M (met), FY15 Target is TWD750M (achievable?)

https://www.facebook.com/pages/BWL-Taiwa...81?fref=nf

Thanks “namralk” for the more up to date link on the BWL Taiwanese market.

I am certainly impressed with the 4Q2014 and FY2014 sales figures of the Taiwanese market – which would contribute positively to Best World’s overall FY2014 results, to be released next month.

The FY2015 target of TWD 750 million, which is a 50% increment to the FY2014 target of TWD 500 million, certainly looks to be a tall order – but I would not be surprised at all if they could meet the target again. Honestly, for FY2015, I would be equally pleased if they could just maintain the FY2014 sales figure.

(vested)

[Boon]

I was looking at the Taiwan market in more details:

Revenue of Taiwanese Market (SGD million):
FY2009 = 4.423
FY2010 = 5.619
FY2011 = 6.458
FY2012 = 9.589
FY2013 = 13.209
FY2014 = about 22.5 (Projection)
FY2015 = target of about 32 million (TWD 750 million)

Best World first reported its Taiwanese market revenue in 2009 – sales has been growing impressively since – but with a population of only about 23 million, one wonders how far could Best World grow in this market?

Quote from page 11 of AR2013:

“our Taiwan subsidiary has posted yet another record-breaking year. Since 2009, Taiwan has consistently displayed strong revenue and profit growth. In line with management expectations, Taiwan achieved an impressive year-on-year revenue growth of 37.8% from $9.6 million in FY2012 to $13.2 million in FY 2013. This growth is attributed to the tightly knitted local management and its motivated distributor leadership. To further fuel this growth momentum, a new regional centre in Taipei was launched in FY2013. This centre provides a solid training base for our expanding distributor network, taking advantage of the higher GDP per capita and thus, disposable income of the consumers in the economic heart of Taiwan. Active human capital deployment ensures our growth sustainability. In 2013, Taiwan’s team was strengthened with the appointment of its new Country manager, Mr Simon Yeh, a direct selling veteran in Asia with a proven track record, setting the stage for the next evolution of growth in Taiwan for the foreseeable future.”

For FY2014, if sales of about SGD 22.5 million could be achieved in this market of about 23 million population - it translates into revenue of about SGD 1.00 per population.

Bench marking against the Singapore market with a population of about 5.5 million and sales of about SGD 8.1 million (in FY2013) – equivalent to revenue of SGD 1.47 per population (note that highest sales achieved in Singapore was SGD 24 million back in FY2006 and GNI per capita in Taiwan is lower compared to Singapore)

Perhaps, there are still rooms for growth in the Taiwanese market - but for how much longer before it reaches its peak ? Will see !

(vested)

[Boon]

FY2014 Results:

Revenue (SGD, Million):
FY2007 =102.180
FY2008 = 96.063
FY2009 = 72.956
FY2010 = 49.549
FY2011 = 41.532
FY2012 = 48.218
FY2013 = 41.081
FY2014 = 75.265 (Up 83.2% yoy ; Highest revenue registered in the past 6 years since 2009)

NPAT (SGD, million)
FY2007 = 13.504
FY2008 = 10.626
FY2009 = 9.671
FY2010 = 2.450
FY2011 = 0.274
FY2012 = 1.800
FY2013 = 1.429
FY2014 = 4.054 ( Up 183.7% yoy ; Highest NPAT registered in the past 5 years since 2010)

Gross Profit Margin (GPM) :
FY2007 = 76.2%
FY2008 = 76.7%
FY2009 = 73.9%
FY2010 = 77.2%
FY2011 = 79.1%
FY2012 = 77.2%
FY2013 = 77.4%
FY2014 = 74.4% (Down 3% points yoy)

Net Profit Margin (NPM) :
FY2007 = 13.2%
FY2008 = 11.1%
FY2009 = 13.3%
FY2010 = 4.9%
FY2011 = 0.7%
FY2012 = 3.7%
FY2013 = 3.5%
FY2014 = 5.4% (Up 1.9% points yoy ; Highest NPM registered in the past 5 years since 2010)

EPS (SGD, Cent)
FY2007 = 6.51
FY2008 = 5.15
FY2009 = 4.79
FY2010 = 1.19
FY2011 = 0.13
FY2012 = 0.88
FY2013 = 0.70
FY2014 = 1.86 (Up 165.7% yoy ; Highest EPS registered in the past 5 years since 2010)

DPS (SGD, Cent):
FY2007 = 3.2
FY2008 = 2.2
FY2009 = 2.2
FY2010 = 2.2
FY2011 = 0.6
FY2012 = 1.2
FY2013 = 0.3
FY2014 = 0.8

Cash & Cash Equivalent (SGD, million)
FY2007 = 35.437 (Debt = 1.6)
FY2008 = 30.610 (Debt = 0.0)
FY2009 = 36.079 (Debt = 0.0)
FY2010 = 36.733 (Debt = 0.0)
FY2011 = 31.975 (Debt = 0.0)
FY2012 = 28.241 (Debt = 0.0)
FY2013 = 33.283 (Debt = 3.5)
FY2014 = 40.975 (Debt = 6.0)

Comments on FY2014 results:
1) For FY2014, yoy : Revenue increased 83.2% ; NPAT increased 183.7% ; EPS increased 165.7%;
2) For FY2014, GPM decreased 3% points from 77.4% (in FY2013) to 74.4% (in FY2014); however, NPM increased 1.9% points from 3.5% (in FY 2013) to 5.4% (in FY 2014). The FY2014 NPM was the highest registered in the past 5 years since 2010.
3) The Group generated positive operating cash flow of SGD 11.1 million from its operating activities in FY2014.
4) The Group continued to maintain a healthy balance sheet with a cash position of SGD 41.0 million as at 31 December 2014. ( Cash net of debt = SGD 35 million)
5) The strong performances from the Group’s businesses in Philippines, Taiwan, China and Singapore had contributed to the good results in FY2014.
6) The Manufacturing/Wholesale segment, which is made up of sales generated by Best World (Zhejiang) Pharmaceutical Co., Ltd. (“BWZ”) contributed SGD 7.1 million in revenue to the Group for the 10 months period from March to December of FY2014, constituting 9.4% of the Group’s total revenue.
7) Management is cautiously optimistic that the Group shall perform positively in FY2015, due to continual growth in key markets like China, Taiwan and Philippines and the launch of several new products in the next few quarters.
8) China direct selling license application is proceeding on schedule.
9) Overall, I am very pleased with the FY2014 results but am disappointed with the FY2014 DPS of 0.8 cent only. With the strong BS, the Group could certainly afford to pay 1.2 cent, IMO. (Ha-ha !)

Moving Forward:
10) Taiwan is the no:1 revenue contributor (contributed 30.2% towards total revenue) in FY 2014. Revenue in Taiwan had grown 71.9% from SGD 13.2 million (in FY2013) to SGD 22.7 million (in FY2014). In 2015, a revenue target of around SGD 32 million (TWD 750 million) has been set.
11) Philippines is the no:2 revenue contributor (contributed 24.6% towards total revenue) in FY 2014. Revenue had grown 608.7% from SGD 2.6 million (in 2013) to SGD 18.47 million in 2014. Management seems optimistic on growth potential of this market
12) China is the no:3 revenue contributor (contributed 17.2% towards total revenue) in FY2014. Revenue in China had grown 404.9% from SGD 2.6 million (in FY2013) to SGD 12.98 million (in FY2014), operating under the duo mode of Manufacturing/Wholesale model and Export model. I think the growth potential under these duo business models alone are not small and should not be under-estimated. An online platform would be launched in China by 2H2015 as well.
13) It appears to me that Best World has turnaround and poised for growth again. The growth potential of Best World (even without having obtained any DS lisence in China) looks good to me. With the DS license in China, the growth potential would be enormous.
14) With a share price of SGD 22.0 cents; EPS of 1.86 cent and DPS of 0.8 cent => Historical PE of 11.8 and dividend yield of 3.6%.
15) A growth stock with a historical PE of 11.8 ? If Best World could live up to its future growth potential, what should its forward PE be ? Has these growth potential been priced in?

(vested)

[Boon]

1Q2015 results:

Revenue (SGD Million)
1Q2014 = 12.802
2Q2014 = 18.278
3Q2014 = 19.229
4Q2014 = 24.957
1Q2015 = 13.507 (5.5% higher than 1Q2014 but 46% lower than 4Q2014) Note: 1Q has normally been the weakest quarter for the Group’s core business of Direct Selling due to its seasonal nature and the long Chinese New Year holidays.

1Q Revenue (SGD million):
1Q2010 = 11.526
1Q2011 = 9.308
1Q2012 = 9.326
1Q2013 = 9.022
1Q2014 = 12.802
1Q2015 = 13.507 (Highest 1Q revenue in the last 6 years)

NPAT / EPS
1Q2014 = 0.121 million / 0.06 cent
2Q2014 = 0.758 million / 0.34 cent
3Q2014 = 1.123 million / 0.51 cent
4Q2014 = 2.052 million / 0.93 cent
1Q2015 = 0.249 million / 0.11 cent

GPM / NPM
1Q2014 = 74.0% / 0.9%
2Q2014 = 69.8% / 4.1%
3Q2014 = 75.5% / 5.8%
4Q2014 = 77.1% / 8.2%
1Q2015 = 74.9% / 1.8%

Taiwan Revenue (SGD million)
1Q2014 = 2.418
2Q2014 = 4.157
3Q2014 = 4.940
4Q2014 = 11.196
1Q2015 = 4.465 (84.7% higher than 1Q2014 but was 60% lower than 4Q2014)

China Revenue (SGD million)
1Q2014 = 2.195
2Q2014 = 3.296
3Q2014 = 3.117
4Q2014 = 4.372
1Q2015 = 3.088 (40.7% higher than 1Q2014 but was 29% lower than 4Q2014)

Comments:
1) Revenue for 1Q2015 was 5.5% higher than the same period last year (1Q2014) but was 46% lower compared to 4Q2014.
2) 1Q2015 revenue was the highest 1Q revenue in the last 6 years.
3) 1Q has normally been the weakest quarter for the Group’s core business of Direct Selling due to its seasonal nature and the long Chinese New Year holidays.
4) The acquisition of BWZ last year has certainly expanded the diversity in distribution channels for BWL in China. Firstly, it has qualified BWL to put in an application for a DS license in China. Secondly, BWZ has allows BWL access to the Manufacturing/Wholesale distribution network in 31 provinces in China. And thirdly, Management would further capitalize on the BWZ’s business by launching the E-commerce platform and new products to the channel in 2H2015. Online sale is another huge potential in China.
5) The Group also enjoyed a higher export volume to its China agent compared to the same period last year. As a result, revenue from China in 1Q2015 grew 40.7% from $2.2 million to $3.1 million compared to the same period last year.
6) Management is cautiously optimistic that the Group will perform positively for the remaining periods of FY2015, due to continual growth in key markets like Taiwan and China as well as the launch of several new products in the next few quarters.
7) Overall, it was a good start for the year as the 1Q2015 result was better than that of 1Q2014. As 1Q is normally the weakest quarter, it would make no sense to annualize. Hence, it remains too early to make any prediction on the FY2015 result - have to wait for 2Q results for better indications..............
8) That said, in the long run, I remain very optimistic on the potential that the China market has to offer.

(vested)

[turnngrow]

Look at how Best World paid her 2 CEOs and COO in 2014:
Executive Directors
Dr Dora Hoan Beng Mui $1,000,000 to $1,200,000
Dr Doreen Tan Nee Moi $1,000,000 to $1,200,000
Mr Huang Ban Chin $600,000 to $800,000
Note: Must hide actual salary within 20% band. Lack transparency in top mgt pay.
NPAT: $4.1m and EPS: 1.86c

Versus

How Nordic Holding paid her 3 top management last year:
Chang Yeh Hong (Chairman) $715K
Dorcas Teo Ling Ling (CEO) $377K
Eric Lin Choon Hin (ED) $354K
Note: Very specific in disclosure. Good transparency in top mgt pay.
NPAT: $7.9m and EPS: 2c


From my assessment, Best World is paying her top management so well that they have been too complacent in developing her business and we shall not expect too much from her china play, which will take a long time as they would prefer to enjoy steady pay than rock the boat of enjoying so high salary per year.

[Boon]

2013 (Best World)
Dr Dora Hoan Beng Mui $600,000 to $800,000 (Salary = 89% / bonus = 8%/ benefit in kind = 3%)
Dr Doreen Tan Nee Moi $6000,000 to $800,000 (Salary = 89% / bonus = 8% benefit in kind = 3%)
Mr Huang Ban Chin $400,000 to $600,000 (Salary = 88% / bonus = 8%/ benefit in kind = 4%)

2014 (Best World)
Dr Dora Hoan Beng Mui $1,000,000 to $1,200,000 (Salary = 70% / bonus = 27%/ benefit in kind = 3%)
Dr Doreen Tan Nee Moi $1,000,000 to $1,200,000 (Salary = 70% / bonus = 27%/ benefit in kind = 3%)
Mr Huang Ban Chin $600,000 to $800,000 (Salary = 75% / bonus = 22%/ benefit in kind = 3%)

So disclosure in band = lack of transparency (it is in compliance with disclosure requirement, nevertheless)

Disclosure in very specific = Good transparency (What if there is no breakdown given on the specific ?)

Did Nordic show the breakdown on how the specific pay was arrived at ?

It would be interesting indeed to find out if the top management of BWL is over or under paid compare to its peers…………………………

But is it fair or appropriate to compare Best World to Nordic? Are they both in the same industry?

What do you think had contributed to the higher pay in 2014 compare to 2013 for the top 3 management of Best World?

Did they feel complacent about their 2013 pays?

Did they work harder to achieve better results (and hence pays) in 2014?

What made you think they would feel complacent about their 2014 pay going forward ?

Do you expect them to get the same pay in 2015 as in 2014, even if the FY2015 results fall below that of FY2014 ?

On China play
1) BWL has been exporting to its China agents prior to the acquisition of BWZ (the Export business model)
2) With the acquisition of BWZ last year – it had immediate access to the Wholesale distribution network covering 31 provinces in China
3) The E-Commerce platform would be rolled out in China in 2H2015 (Online model)
4) The acquisition of BWZ has qualified BWL to put in an application for a DS license in China

The potential that could be exploited via the first 3 distribution networks is not small and should not be underestimated, iMO. – and these are not long shots…………….Direct Selling license may be a longer shot …but who knows.......................

Could all these progresses be made had the management stayed complacent in developing the business?

(vested)

[Boon]

"The acquisition of BWZ last year contributed positively to the Group’s revenue from China in 1Q2015 and at the same time expanded our diversity in distribution channels.

Management shall continue to capitalise on the BWZ’s business by launching the E-commerce platform and new products to the channel in 2H2015."

E-commerce in China: Driving a new consumer culture
https://www.kpmg.com/CN/en/IssuesAndInsi...-China.pdf

How successful would BWL's E-commerce platform be in China? Only time will tell.................

(vested)