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Best World
18-05-2018, 03:38 PM,
Post: #801
Brick  RE: Best World
(16-05-2018, 09:20 AM)Squirrel Wrote:
(16-05-2018, 08:50 AM)Boon Wrote:
(02-05-2018, 06:34 PM)dreamybear Wrote:
(02-05-2018, 01:44 PM)Boon Wrote:
(01-05-2018, 12:33 AM)dreamybear Wrote: .........(truncated)

There is quite substantial Q&A on the low export sales in 1Q2018(ref : pg 12/13 AR), but basically the reason is as per given in the AR.

.........(truncated)

"There is quite substantial Q&A on the low export sales in 1Q2018(ref : pg 12/13 AR), but basically the reason is as per given in the AR."

Hi Dreamybear,

The reason given in 4Q/FY2017 results is: 

“As Export Agent had placed their orders for the next three to six months in 4Q2017, there is a possibility that 1Q2018 may be weaker than 1Q2017”.

whereas reason given in AR2017 (page 12/13) is "the conversion from Export Model to China Wholesale Model".

Why the inconsistency ?

Hi Boon,

Some shareholders were worried abt the possible drop in share price because of this low export in 1Q2018, so during the AGM, they wanted to clarify with HBC.

I think it is the “manner” in which it is written. BW is currently shifting from

Existing Export Agent(EA) model : BW > EA > Beauty/Hair Salons > Members/Customers  

to

New China wholesale model : Subsidiary BW China Pharmaceutical Co. (BWCP) > Exp Center(converted fr Beauty/Hair Salons) > Members/Customers.

Because there is a change in company(from EA to BWCP) importing products into China, there are additional paperwork to be approved by the Chinese govt. During this transition period, mgmt wants to factor in any delays which may arise from obtaining the necessary approvals. Hence in 4Q2017, BW deliberately imported more goods(i.e. 3 – 6 months worth) through EA, in case all the paperwork for BWCP hasn’t been sorted out by 1Q2018. This wil ensure ample supply for goods in China throughout 1Q2018.

So for 1Q2018, the revenue in the Export segment will be minimal(since already acct for in 4Q2017 revenue as additional supply were imported as a buffer). I guess in the event that the additional supply of goods imported through EA during 4Q2017 are not exhausted by 1Q2018,  the 2Q2018 overall revenue figures will be compacted too. (once BWCP is in operation, revenue will be captured under China Wholesale category.)  

------------

On a separate note(welcome views from all forumers) , since mgmt mentioned China Direct Selling regulation to be “3 levels 2 layers”(translated from Chinese), does it mean the following structure :

BWCP (level 1)

      | (Layer1)

Exp Center (EC) / Distributors  (level 2)     < earn DS commission >

     | (Layer 2)

Customers (level 3)

If this is the case, does it mean
1.  Since only 1 level of commission is allowed, each BW China distributor has to work harder than traditional MLM because he/she cannot leverage off the network effect ? 
2.  Unless a person has the capital to open a EC, he/she cannot be a distributor ?

Would be grateful if anyone who is currently a China DS can share some insights.

There is nothing stopping both EA and BWCP from importing products into China at the SAME time, is there?
 
Why must EA stop importing BEFORE BWCP starts importing? (or why must BWI stop exporting to EA BEFORE it starts exporting its own products to its China subsidiary, BWCP ?)
 
Logically, to assure “continuity” of supply in China, BWI must ensure that BWCP would have imported enough stocks into China BEFORE stopping supplying to EA (through exporting). And this is the pre-condition that could be planned way ahead.
 
If BWCP failed to import any products into China, BWI would just have to keep exporting through to EA, wouldn't it ? 
 
Therefore, the argument that “BW deliberately imported more goods(i.e. 3 – 6 months worth) through EA, in case all the paperwork for BWCP hasn’t been sorted out by 1Q2018. This wil ensure ample supply for goods in China throughout 1Q2018” doesn’t make sense to me.

I believe there are questions on why there is a need in the first place to pre order 6 months of goods for a conversion. And would that mean that last year's profit has been artificially bumped up by multiples? It won't be a straight 1.5x of profit for 6 months of goods, but rather a higher multiple on that with the fixed cost associated with the firm. How should last year's China export figures be interpreted?

In the 1Q report, its troubling to see Taiwan's revenue continue to spiral down. A 35% drop Y-O-Y with Q12017 already registering circa 8% drop Y-O-Y from 2016. As per previous concerns, will it follow down the path to being included as "Others" like the other prominent markets it used to have? It will be interesting to track Taiwan progress in order to gauge their staying power in a market, which up till now does not have a good track record.

Let me do some assumption to arrive a simple estimation for China actual sales
1. Receivable all coming from China sales. (Of course not true, but mostly from China export should hold)
2. There is no product shortage at the end of the quarter.

What is receivable in China? they are products shipped to China, recorded, not yet sold. So this is as good as inventory.
Previous quarter Receivable+ current quarter China export - current quarter Receivable = Current Quarter sales in China

Do correct me if my thinking is at fault

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18-05-2018, 09:05 PM,
Post: #802
RE: Best World
(18-05-2018, 01:26 PM)Wonderful Wang Wrote:
(01-05-2018, 03:08 PM)Boon Wrote:
(08-04-2018, 12:36 PM)Wonderful Wang Wrote:
(12-09-2017, 11:17 PM)Boon Wrote:
(12-09-2017, 05:08 PM)Value Explorer81 Wrote: https://www.nextinsight.net/story-archiv...-in-2h2017

Best World's chief operating officer, Huang Ban Chin, didn't overstate things when he said in an interview with Business Times last week: “The company is on track to hit analyst targets of S$41 million to S$44 million of net profit for 2017. This translates to a 20-30 per cent improvement from 2016.” 

What drove profit growth in 1H2017 was demand for Best World’s DR’s Secret skincare range of products in China. This will continue to be the thrust in 2H2017, as Best World widens its outreach to Chinese consumers.

Seems like BWI is not affected by the crackdown in China and they are on track to achieve $41mm to $44m NPAT in line with analyst estimates. A company that continue to deliver value to both its customer and to society will continue to thrive and do well. BWI stock price is also starting to recover from the crash.

Without the “illegal multi-level-compensation structure”, how would the “real” demand be? How would the “real” sales figure be? “The COO didn’t overstate things”, it got to be kidding, I reckon.

Boon,

I'm wondering what caused you to change your view on Best World.

In May 2017, you were bullish:

Share price closed at 2.81 (post-bonus) or 3.51 (pre-bonus)  – another new all time high record. 

  Based on  0.24 (pre-bonus) a share, it is inching closer to 15-bagger now


https://www.valuebuddies.com/thread-1033-page-44.html


But in Sep 2017, you doubted and wrote:

Without the “illegal multi-level-compensation structure”, how would the “real” demand be? How would the “real” sales figure be? “The COO didn’t overstate things”, it got to be kidding, I reckon.

https://www.valuebuddies.com/thread-1033-page-76.html


Ha-ha ! Seems to me that you are asking the "obvious"................Without the “illegal multi-level-compensation structure”, how would the “real” demand be?

Hi Boon,

Would you be able to provide us with your insights to why you changed your mind?

Also, what are you referring to that is "obvious"?

Put it this way to make it more interesting:

Where do you get your "insights" that I have changed my mind in the first place ? Was it "obvious" to you ?
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.

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