Best World

[dreamybear]

BW released its FY2022 results - profit : $136m, operating CF : $183m.
Strong set of results and maintaining "fortress" balance sheet once again*.

No dividends declared.  *Ouch!*

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

https://links.sgx.com/FileOpen/BWG%20FY2...eID=747847
"21. Dividend
In view of the Group's short and medium term commitment which include but are not limited to, working capital requirements and corporate actions capital needs, as well as taking into consideration the uncertain business climate explained further in Section 4 of Other Information, no dividends have been declared/recommended by the Board for the financial year ended 31 December 2022....

24. Borrowings and debt securities
The Group did not have bank borrowings and debt securities as at 31 December 2022 and 31 December 2021..... "

*Pls refer to pg33 for historical net cash
https://bestworld.listedcompany.com/misc...FY2021.pdf

[Shiyi]

The company has cash on hand of $484 million. Its net profit last FY was as high as $136 million, or eps of close to 29 cents.
Very strong performance indeed. Yet it has not declared dividends for more than three years.
Any red flag?

[CY09]

Specific to best world, there is a red flag.

Besides giving out dividends, a company can do share buyback to improve shareholder returns. So while Best World has not issued dividends, the question is have they been actively buying back shares to improve shareholder value.

The answer is sadly a no. Thus far, approximately 1.35% of shares were bought back out of the 10% its allowed. The 10% share buyback mandate is up for renewal in April 2023 and it shows how slow Best World is doing things.

IMO, it has very terrible investor relations/realising value for OPMI. I would strongly suggest voting out the Independent Directors during AGM/ not voting them to continue their role. New IDs may help to improve on corporate action in helping OPMI's realise value

[ghchua]

The answer is sadly a no. Thus far, approximately 1.35% of shares were bought back out of the 10% its allowed. The 10% share buyback mandate is up for renewal in April 2023 and it shows how slow Best World is doing things.

Hi CY09,

To be fair to the company, the stock had been suspended for most part of last year. They only resume trading in November 2022, which gives them limited period to do share buyback. Plus, before their FY financial result release, there is a blackout period whereby they could not have bought any shares. So, technically, they would only have two full months to do share buyback from the market - i.e. December 2022 and January 2023. This plus the fact that there are lesser free float out there after two rounds of EAO buybacks when the stock was suspended.

So how could you expect them to use up all the 10% share buyback mandate? Remember when you do share buybacks, you cannot also aggressively buy up the majority of the trading volume in a day. There are rules in place in terms of the maximum price that you can buy too.

[CY09]

Share buyback was not done daily, there were 2-3 weeks periods where no share buyback was done 29 Dec-18 Jan and 24 Nov-20 Dec. This amounted to almost half of the period where no share buyback was done.

There were trading volumes during these days where no buyback was done

[dreamybear]

Well, more than one month on, after the results release, share buybacks were still not continued...

BW has obtained updates from M&T and Dentons & seems to have obtained a better audit opinion. Together with its huge cash holdings, strong cash flows, can BW be "great" again, i.e. what else must happen b4 BW trades back at historical P/E valuation ? What is the missing piece in the old puzzle or has a new normal emerged ? According to the last and current ARs, the no. of shareholders seem to have decreased. Any VBs still holding on ?

The compensation of the directors is another interesting topic .....

Speaking of the upcoming AGM, disappointed it's via electronic means. There is an independent director seeking re-election.

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

Update on Compliance With Condition 2(a)
https://links.sgx.com/FileOpen/2023%2004...eID=755610

BW AGM Q&A
https://links.sgx.com/FileOpen/2023%2004...eID=755611

BW AR2022
https://links.sgx.com/FileOpen/BWIL%20AR...eID=754038

Qualified Opinion FY21
https://links.sgx.com/FileOpen/2022%2007...eID=723265

BW has been included in the MSCI index ....
https://app2.msci.com/eqb/gimi/smallcap/...icList.pdf

[dreamybear]

Hope company share part of its $400+ mil cash hoard with shareholders via SBB or dividends ....

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

@ BEST WORLD AGM: "We're concerned why no dividends"
https://nextinsight.net/story-archive-ma...nds-at-agm

BW 1Q2023 FS
https://links.sgx.com/FileOpen/2023%2005...eID=758402

[CY09]

In my view, it is not an OPMI shareholder friendly company.

I have written before among the executives hired in SGX listed companies, the two co founders have the second and third highest pay in Singapore, right after DBS CEO piyush. They are paid higher than the executives of Wilmar, OCBC, UOB despite raking in a small % of these companies profits.

https://investmoolah.blogspot.com/2022/0...-ceos.html

Companies that are (i) OPMI unfriendly and (ii) founders own a large % of shareholdings are difficult to value because activist investors need tremendous efforts to buy a significant stake.

All the best in trying to effect a change for OPMI of best world.

My view is that the only way to help is that OPMI band together to vote out the independent directors (IDs) during AGM as it sends a message and Best World will have to go to full lengths to continously find IDs to meet listing requirements. There are a few IDs who work for OPMIs interest, such as at International Cement and Unionsteel; but unfortunately these IDs do not hold many ID posts

[weijian]

Hope company share part of its $400+ mil cash hoard with shareholders via SBB or dividends ....
----------------------
@ BEST WORLD AGM: "We're concerned why no dividends"
https://nextinsight.net/story-archive-ma...nds-at-agm
BW 1Q2023 FS
https://links.sgx.com/FileOpen/2023%2005...eID=758402

Question:  Use of cash for working capital and regional centres is not going to be more than $10-20m but the cash balance is hundreds of millions. So, I am afraid your answer about hoarding cash is not satisfactory. Do you have specific M&A targets you are looking at?

Answer:  Ban Chin: As sales increase, we anticipate that our subsidiaries will need to use much more than $20 million in cash, and the amount to be held will ensure that our subsidiaries hold at least six months' worth of inventory to ensure that our distributors and customers do not experience any loss of sales due to inventory shortages. This has become even more important during the Covid-19 restrictions, which have disrupted shipments to our subsidiary. Our priority is to maintain a positive customer experience, and avoiding inventory shortages is key to achieving this. We believe that it is important to maintain these funds to support the growth of our business, rather than distributing them as dividends, which could lead to a need for fundraising in the future. Regarding mergers and acquisitions activity, we are constantly exploring opportunities and discussing them with advisors. We carefully filter these opportunities, and if any seem promising, we will promptly inform our shareholders.

https://links.sgx.com/FileOpen/BWIL%20AG...eID=760716

----------

Based on FY22, BWI's working capital needs are: All current liabilities + inventories + receivables = 219mil + 53mil + 11mil = 283mil.

BWI has really low COGS and high GPM, and a negative cash conversion cycle (like Sheng Siong!). So any further increase to its largest liability (trade payables: how much it has to pay its suppliers/employees) will always increase the cash with a good buffer correspondingly.

53mil of inventories is on a turnover days of ~170days. So let's say Mr Ban wants to increase the availability of inventories to 1 year, the inventories will double to ~100mil. Working capital needs will be 283mil + 50mil = 333mil. There is still excess 150mil cash (or ~34cents/share based on 436mil outstanding share count).

How much do the regional centers need? Do they intend to buy over rent?
Nonetheless, they do have an elephant gun for M&A it seems!

[dreamybear]

Based on FY22, BWI's working capital needs are: All current liabilities + inventories + receivables = 219mil + 53mil + 11mil = 283mil.

BWI has really low COGS and high GPM, and a negative cash conversion cycle (like Sheng Siong!). So any further increase to its largest liability (trade payables: how much it has to pay its suppliers/employees) will always increase the cash with a good buffer correspondingly.

53mil of inventories is on a turnover days of ~170days. So let's say Mr Ban wants to increase the availability of inventories to 1 year, the inventories will double to ~100mil. Working capital needs will be 283mil + 50mil = 333mil. There is still excess 150mil cash (or ~34cents/share based on 436mil outstanding share count).

How much do the regional centers need? Do they intend to buy over rent?
Nonetheless, they do have an elephant gun for M&A it seems!

Thx for working out the numbers.

Well, I wld be surprised if they are looking at M&A at this stage, considering :
1) why not use the cash to conduct SBB at current "depressed" share prices (esp vs historical valuation of BW shares pre-suspension) which I feel is in the best interests of the company/shareholders
2) why not spend the energy on the remaining conditions in the SGX no-objection letter for trading resumption and/or engaging institutional investors

I am still puzzled on the lack of SBB....