Best World

[CityFarmer]

Is the company special among DS companies? IMO, conclusion based on Taiwan recent success, is premature.

Will the company become one of tomorrow global champions?

First of all, what make a DS company great?

- Great product. Few products of the company, has withstood the test of time. DR Secret/Seager and Optrimax are the few products, which well-accepted by consumers more than a decade. The company products are also suitable for DS, which are require high touch and personal service.
- Sustaining product innovation, based on previous successes. We knew, the company has regular new product launches.
- Effective training, promotional events. Training is always a big part of company strategy. Few will dispute with the company's ability on motivational speeches. Anyone?
- Compensation of distributors and members. Based on the distribution expenses in ARs, the compensation is competitive.
- Financially strong and viable. DS revenue, could be volatile with its biz model, thus financially strong is very important, IMO. The company is debt-free, and financial ratio and cash flow are good.

The company has the key ingredients, the rest is luck and execution, IMO. What do you think?

(not vested, why? price not right  )

P/S: Online facilities have been deployed by other major DS companies for years, but no success highlighted in their ARs. I reckon, the online facility might reduce the logistic cost, but will not play significant role in profitability and biz growth. I don't know the reason? May be personal touch, is still the big part of the biz model, and non-replaceable by machine. Any comment?

[Boon]

Is the company special among DS companies? IMO, conclusion based on Taiwan recent success, is premature.

Will the company become one of tomorrow global champions?

First of all, what make a DS company great?

- Great product. Few products of the company, has withstood the test of time. DR Secret/Seager and Optrimax are the few products, which well-accepted by consumers more than a decade. The company products are also suitable for DS, which are require high touch and personal service.
- Sustaining product innovation, based on previous successes. We knew, the company has regular new product launches.
- Effective training, promotional events. Training is always a big part of company strategy. Few will dispute with the company's ability on motivational speeches. Anyone?
- Compensation of distributors and members. Based on the distribution expenses in ARs, the compensation is competitive.
- Financially strong and viable. DS revenue, could be volatile with its biz model, thus financially strong is very important, IMO. The company is debt-free, and financial ratio and cash flow are good.

The company has the key ingredients, the rest is luck and execution, IMO. What do you think?

(not vested, why? price not right  )

P/S: Online facilities have been deployed by other major DS companies for years, but no success highlighted in their ARs. I reckon, the online facility might reduce the logistic cost, but will not play significant role in profitability and biz growth. I don't know the reason? May be personal touch, is still the big part of the biz model, and non-replaceable by machine. Any comment?

Ultimately, “special” = “ability to compete”
 
Just to add on to the “key ingredients” list:
 
Experienced management team with great strategic vision and execution capability is also essential.

Supply chain management capability is also essential – this includes production capability to meet both qualitative and quantitative demands. To meet this end as business grows, in-house manufacturing capability become critical as well.
 
Ability to attract and retain distributors is critical in DS business - competitive compensation scheme alone is not enough.

Up to date and relevant distributors support infrastructure (training, online platform etc.) that would empower distributors could make a difference but might still not be enough.

Company values such as harmonious culture, fairness and integrity could ultimately make a difference, I reckon.

Fairness and integrity include never go around distributors and never compete with distributors – e.g. distributors should get their fair share of commission for online orders placed by their customers – online platform should never be intended to compete with distributor but to improve efficiency of supply chain management.
 
A strong balance sheet could support both organic and inorganic growth.

BTW, Amway also peaked in 2013 (the 4th peak in 55 years).
 
Amway global sales (2010 to 2015):
2010 =   9.2 b
2011 = 10.9 b
2012 = 11.3 b
2013 = 11.8 b (peak)
2014 = 10.8 b
2015 =   9.5 b
 
IMO, given time, the grow-peak-decline pattern would ultimately be visible to all companies regardless of size or revenue (below or above USD billion), if it is not yet observable now in some.
 
Ultimately, what makes a company special, IMO, is its ability to bounce back stronger following each declining phase – which essentially boils down to ability to compete (again).
 
Amway had shown this ability to bounce back stronger following each decline. Can it do it again this time? Only time will tell…………………..
 
For BWI, it has also shown this special quality of being able to bounce back stronger following its first declining phase, attributable to its ability to compete and gain market share in the competitive Taiwanese market.
 
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BTW, investment in online platform already paid dividends……..

In 2Q2016 results announcement:

Taiwan
With the new contribution from the launch of the online store and opening of the third RC in Kaohsiung during the first quarter of the year, Taiwan market continued to gain traction in 1H2016. Revenue from Taiwan increased by $40.6 million in 1H2016 mainly due to the following: 

• Online platform contributed $16.4 million;
• Our Kaohsiung RC, which was opened in January this year contributed $12.1 million;
• Taichung RC and Taipei RC registered $12.1 million increase in sales. 
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[chialc88]

I searched my old iphone and found this one captured on 12 Jan 2013:



It seems like Dora also agrees with CF on the critical success factors in order to be in the game.

Let's hope that BWL team can play it well not just in TW but also in CHN too.

<v>

 Love Compassion

[JanQuin]

1. To be the next Amway is a tall order for BWL at this moment. For one, Amway has a much wider product range. Also, having been an Amway distributor for a short while, I believe its training programme is more established than BWL (nope, haven't been a BWL distributor before).

2. "CF wrote (not vested, why? price not right  [Image: tongue.gif] )"
Personally, I think that IF BWL can execute its strategies and manage to grow its China markets for next few years, then the current price is not expensive.

3. It is interesting to see the two sets of numbers from Nu Skin and Amway from 2010 to 2015. Once they peaked, they dropped. Not sure if this is the nature of DS business. I would have thought that for any company,when its sales peaked, there might be a period of stagnation in its sales number, instead of dropping immediately.

[Boon]

EPS (based on fiscal year) changes only once a year.
 
Quarterly EPS is available every quarter.
 
But PE changes everyday because share price changes every day.

For trailing PE, a more up to date comparison would be to compute PE using EPS (TTM) instead of Trailing EPS (based on fiscal year).

EPS (BWI): SGD cents
1Q2015= 0.11
2Q2015= 0.96
3Q2015= 1.83
4Q2015= 1.69  (FY2015 = 4.59)
1Q2016= 2.71  {Trailing Twelve Months  (TTM) EPS = 0.96 + 1.83 + 1.69 +2.71 = 7.19}
 
Price = 113.5 cents
 
PE (TTM) = 113.5 / 7.19 = 16
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[Image: 2f03e9y.jpg]


I have computed the above table using EPS (TTM). As can be seen, as at 07-June-2016, using share price of 1.45 (52 week high), PE(TTM) for BWI was at 20, still lower than the  highest of 24 (Nu Skin) but higher than the rest (15 ~ 17).
 
After the price correction of BWI, as at 10-Jun-2016, PE (TTM) of BWI has dropped from 20 to 16, while that of Usana dropped slightly from 17 to 16.
 
Nu Skin still has the highest PE (TTM) of 24, but BWI’s 16 is almost on par with the remaining 3 companies (15 ~ 16)

So, using PE (TTM) as the sole valuation metric, and taking into consideration of future earning growth rate, which is the cheapest among the 5 stocks NOW ? 
 
EPS (TTM) would be updated upon 2Q2016 results announcement in August. 

By then, if prices of the 5 stocks remain unchanged, relatively, which would likely to become "even cheaper"  ? 
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[Image: 2qdxv1e.jpg]

I have updated the latest EPS (TTM) based on the latest quarterly 2Q2016 results. Note that I have dropped Tupperware as its product lines are different.
 
As at 19-Aug-2016, using PE(TTM) as the sole valuation matric, BWI’s 18 is on par with Usana, but is lower than Nu Skin and Herbalife. And I believe it is still the “cheapest” among the 4 stocks taking into consideration of its future EPS growth potential.
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[Boon]

http://infopub.sgx.com/FileOpen/2016%200...eID=418205

PROPOSED BONUS ISSUE – RECEIPT OF IN-PRINCIPLE APPROVAL FROM SINGAPORE EXCHANGE SECURITIES TRADING LIMITED (“SGX-ST”) 
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[CityFarmer]

I reckon, the differences in our valuation, is mainly due to different view in future earning.

I agreed with Mr. d.o.g assessment on the company future earning. The company's portfolio now, is ~60% in Taiwan, and ~20% in PRC. Once Taiwan's biz loses steam in near future due to whatever reason(s), and PRC biz is yet to pick-up to fill the shortfall, there will be difficult years of the company. How likely is it? My assessment is more likely than not, and is reflected in my valuation.

What is my latest valuation? It varies with assumptions. The fair price range is ~$120 - ~$1.40 per share (pre-bonus).

(not vested, but monitoring closely)

[mslee888]

Another SGX query to Best world on trading activity as below:

This is the 5th query issue to your company in the past 5 months. The board of directors shall collectively and individually take responsibility for the accuracy of the reply to the query........signs of SGX losing patience??

http://infopub.sgx.com/Apps?A=COW_CorpAn...fb6139ddc6

[Boon]

http://directsellingnews.com/index.php/v...7uvOVdYl-U

Meet Direct Selling’s Billion Dollar Markets
July 31, 2016
by Andrea Tortora

The story of direct selling is one of sustained growth that keeps breaking records.

Global retail sales and the industry’s total salesforce both hit new highs in 2015. The World Federation of Direct Selling Associations (WFDSA) estimates that retail sales rose 7.7 percent in 2015 to $183.7 billion, up from $170.6 billion in 2014. The total salesforce jumped 4.4 percent, to 103 million people, up from 99.7 million in 2014. In all, 23 countries posted sales of $1 billion or more from direct selling.

“Direct selling is well positioned in today’s marketplace as consumers seek personalized service and quality products from people who they know and trust,” says Amway President and WFDSA Chairman Doug DeVos. “It results in a great opportunity for aspiring entrepreneurs, many of whom are seeking an opportunity to make a little extra while sharing products that they enjoy. With general attitudes toward entrepreneurship at very positive levels, the recent industry results are encouraging and the future is even brighter.”

Every region in 2015 reported sales jumps, and 80 percent of countries around the world showed increases in both sales and sellers. These are not just flash-in-the-pan bursts of activity, but sustained, steady growth spanning years. 

“Given the mediocre performance of the global economy in 2015, I was pleasantly surprised by the steady and broad-based growth of direct selling during the year,” says Paul Bourquin, managing economist at Nathan Associates Inc. The Washington, D.C.-based economic consultancy works with the WFDSA to maintain confidentiality of incoming data, and to verify and vet the annual global data report.

The numbers are powerful because most national governments do not collect and report statistics on the direct selling channel, and “quite a few direct selling companies seek better or alternative information from that provided by syndicated sources,” Bourquin says. “The worth of the data is revealed by member companies wanting the information and dedicating the time and resources to do the research.”

The WFDSA also tracks the compound annual growth rate (CAGR), a measure of sustained growth over time. The global direct selling industry boasts a 7.2 percent three-year CAGR (2012-2015), with increasing sales from $149.3 billion to $183.7 billion. 

The group of 23 countries with retail sales of $1 billion or more in 2015 claims 94 percent of all global sales. Sales are concentrated among the very largest direct selling markets, with the Top 5 countries accounting for 64 percent of all sales and the Top 10 accounting for 80 percent. The countries are an interesting mix of advanced and developing economies, which points to the strength and appeal of the selling channel in nations with a wide variety of infrastructure and technology as well as political and economic situations.

THE BATTLE FOR No. 1

China was predicted to eclipse the United States as the world’s largest direct selling market as early as in 2015, but growth of 4.8 percent meant the U.S. reached record sales of $36.1 billion, up from $34.5 billion in 2014 and enough for the U.S. to hold onto the No. 1 spot. There are now 20.2 million Americans involved in direct selling, up 11 percent from 18.2 million in 2014.

These latest numbers illustrate the industry’s “strength, vibrancy and vigor” in the United States, says Joseph N. Mariano, President of the U.S. Direct Selling Association. He says the sales growth rate outpaces growth for traditional retail sales and the overall gross national product in the U.S.

“It is gratifying to see record growth in direct selling in the United States for the past five years,” Mariano says. “Today, there are more people involved and more revenue is being generated than at any other time in our history. Direct selling remains relevant today, because in an age defined by technology, people still see great value in person-to-person interaction and demonstration.”

Industry watchers note that China exhibited strong sales growth of its own, with sales jumping 19 percent to $35.5 billion, up from $29.8 billion in 2014. (The number of people selling products for direct selling companies in China is unknown.) As the Chinese government continues to approve more licenses for direct selling companies to do business within its borders, sales in the industry can only skyrocket, and China will most likely overtake the U.S. position in direct selling in 2016 or soon after. Today there are 78 companies with a direct selling license. Within two years that number is expected to jump above 100.....................................................

[Image: 0816_billiondollarmarkets_table.jpg]

[Boon]

http://www.straitstimes.com/business/com...-sgx-query

Best World's price surge prompts SGX query
AUG 23, 2016
Marissa Lee

[Image: st_20160823_mrbest23_2541926.jpg]


Shares of Best World International surged in early morning trade yesterday, prompting the multilevel marketing firm's fifth query from the regulator in five months.

The stock shot up 4.45 per cent to $1.76 three minutes after the opening bell and closed 9.5 cents higher at $1.78, a rise of 5.6 per cent.

Best World told the Singapore Exchange (SGX) that the unusual activity might have been a result of the firm's announcement on Sunday that it had won in-principle approval to proceed with a one-for-four bonus share issue.

"SGX approved the listing of our bonus shares, so over the next few weeks, we'll be able to announce the book closure date," Best World chief operating officer Huang Ban Chin told The Straits Times, adding that the bonus shares will only be issued months later.

Another possible reason for the early morning spike in interest was that investors' website NextInsight had published a bullish recommendation on the stock on Sunday.

Best World's share price has jumped five-fold from 33.5 cents at the start of the year to $1.685 at Friday's close. Earlier, analysts pinned much of the rally to expectations that the seller of beauty products would secure a direct selling licence in China before the year end, and deliver stellar results.

Best World won that licence last month and earlier this month announced a five-fold surge in half-year net profit to $13.3 million, so yesterday's jump made some investors scratch their heads.

But CIMB Securities analyst Jonathan Seow, who has a $1.98 target price, is not worried.

He said: "Maybe the excitement comes from the bonus issue, and the fact that growth is very hard to come by in this market in general."

"SGX is very on the ball," he added of the regulator in the wake of the 2013 penny stock crash.

Mr Huang said: "I think our company is fundamentally strong.

"Prior to obtaining our licence in China, we've been exporting our products to an agent there to reach brand awareness, so when our licence is effective at the end of the year, we don't have to start from ground zero."
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