Best World

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(10-05-2016, 12:36 PM)level13 Wrote:
(10-05-2016, 11:12 AM)Boon Wrote: Seems to me that further upside from a DS license being granted in China has yet to be factored in.
______________________________________________________________________________________________________________________

The fact that they have been talking about the DS license for the past 2 yrs. If that indeed happen, it will be a non - event.  

Whether the license can bring them further upside remains to be seen, for it will be subjected to execution, implementation and operational risks.

What is your timeline expectation to have a DS license approved in China? Less than 2 years?
 
The acquisition of Solid Gold (subsequently renamed Best World Zhejiang or BWZ) was completed at end of Feb 2014. With that (a GMP factory), BWZ was eligible to apply for a DS license in China.
 
Management guided that it had taken the Group 9 months (March 2014 to Dec 2014) to get to the final stage in the application process – a process that normally takes 2.5 years. 
 
The application is currently waiting for approval from the central government.
 
_____________________________________________________________________________________________
 
What is your interpretation of the following statements in bold? These are upsides that could be immediately executed upon granting of a DS license?
 
From AR2015:
“In FY2015, our business in China grew by 52.3%, as demand for our product lines continues to build. Barring any unforeseen circumstances, we believe our 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 distributors, marking another significant growth phase of our business in China. “
 
From CIMB report:
China could be a game changer
“The other catalyst is the company successfully obtaining a direct selling licence in China (management expects 4Q16-1H17). China is currently the group’s second largest market (19% of FY15 sales, +52% yoy), with the bulk of sales coming from exporting products to local agents. The potential therefore comes from converting these exports to sales under a direct selling model, which could double sales in China as selling prices to distributors are significantly higher than export prices.”
______________________________________________________________________________________________________________________
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.
Reply
(10-05-2016, 03:08 PM)Boon Wrote:
(10-05-2016, 12:36 PM)level13 Wrote:
(10-05-2016, 11:12 AM)Boon Wrote: Seems to me that further upside from a DS license being granted in China has yet to be factored in.
______________________________________________________________________________________________________________________

The fact that they have been talking about the DS license for the past 2 yrs. If that indeed happen, it will be a non - event.  

Whether the license can bring them further upside remains to be seen, for it will be subjected to execution, implementation and operational risks.

What is your timeline expectation to have a DS license approved in China? Less than 2 years?
 
The acquisition of Solid Gold (subsequently renamed Best World Zhejiang or BWZ) was completed at end of Feb 2014. With that (a GMP factory), BWZ was eligible to apply for a DS license in China.
 
Management guided that it had taken the Group 9 months (March 2014 to Dec 2014) to get to the final stage in the application process – a process that normally takes 2.5 years. 
 
The application is currently waiting for approval from the central government.
 
_____________________________________________________________________________________________
 
What is your interpretation of the following statements in bold? These are upsides that could be immediately executed upon granting of a DS license?
 
From AR2015:
“In FY2015, our business in China grew by 52.3%, as demand for our product lines continues to build. Barring any unforeseen circumstances, we believe our 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 distributors, marking another significant growth phase of our business in China. “
 
From CIMB report:
China could be a game changer
“The other catalyst is the company successfully obtaining a direct selling licence in China (management expects 4Q16-1H17). China is currently the group’s second largest market (19% of FY15 sales, +52% yoy), with the bulk of sales coming from exporting products to local agents. The potential therefore comes from converting these exports to sales under a direct selling model, which could double sales in China as selling prices to distributors are significantly higher than export prices.”
______________________________________________________________________________________________________________________

I do not have an expectation on timeline in terms of license approval. We are talking about government approval here...........................

What i am saying is that the announcement of obtaining the DS license will most likely be a non-event simply due to the fact that 2 years have passed and they 
are closer to obtain it (i hope) rather than further. Investors will most likely have priced in this DS license announcement. 

The statements in bold are merely the plans of the company and their revenue boosting methods once they obtain the license. There is no need to take that as the gospel truth. 

My point is... there is too much hype surrounding this stock nowadays. Investors tend to be over optimistic and think getting the license = revenue/profit will triple. Nothing is that straight forward.......... you will have all the risks i mentioned earlier. 

Do not get me wrong, i am not trying to talk down the stock. I am also a shareholder. 
My aim is to sound out a word of caution.... the stock price has gone up very quickly in a short space of time and these 'hot' money can move away just as quickly on any hint of bad news.................. 


(vested)
There are no good stocks. Stocks are only good when they go up after you bought them.
Reply
(10-05-2016, 05:03 PM)level13 Wrote:
(10-05-2016, 03:08 PM)Boon Wrote:
(10-05-2016, 12:36 PM)level13 Wrote:
(10-05-2016, 11:12 AM)Boon Wrote: Seems to me that further upside from a DS license being granted in China has yet to be factored in.
______________________________________________________________________________________________________________________

The fact that they have been talking about the DS license for the past 2 yrs. If that indeed happen, it will be a non - event.  

Whether the license can bring them further upside remains to be seen, for it will be subjected to execution, implementation and operational risks.

What is your timeline expectation to have a DS license approved in China? Less than 2 years?
 
The acquisition of Solid Gold (subsequently renamed Best World Zhejiang or BWZ) was completed at end of Feb 2014. With that (a GMP factory), BWZ was eligible to apply for a DS license in China.
 
Management guided that it had taken the Group 9 months (March 2014 to Dec 2014) to get to the final stage in the application process – a process that normally takes 2.5 years. 
 
The application is currently waiting for approval from the central government.
 
_____________________________________________________________________________________________
 
What is your interpretation of the following statements in bold? These are upsides that could be immediately executed upon granting of a DS license?
 
From AR2015:
“In FY2015, our business in China grew by 52.3%, as demand for our product lines continues to build. Barring any unforeseen circumstances, we believe our 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 distributors, marking another significant growth phase of our business in China. “
 
From CIMB report:
China could be a game changer
“The other catalyst is the company successfully obtaining a direct selling licence in China (management expects 4Q16-1H17). China is currently the group’s second largest market (19% of FY15 sales, +52% yoy), with the bulk of sales coming from exporting products to local agents. The potential therefore comes from converting these exports to sales under a direct selling model, which could double sales in China as selling prices to distributors are significantly higher than export prices.”
______________________________________________________________________________________________________________________

I do not have an expectation on timeline in terms of license approval. We are talking about government approval here...........................

What i am saying is that the announcement of obtaining the DS license will most likely be a non-event simply due to the fact that 2 years have passed and they 
are closer to obtain it (i hope) rather than further. Investors will most likely have priced in this DS license announcement. 

The statements in bold are merely the plans of the company and their revenue boosting methods once they obtain the license. There is no need to take that as the gospel truth. 

My point is... there is too much hype surrounding this stock nowadays. Investors tend to be over optimistic and think getting the license = revenue/profit will triple. Nothing is that straight forward.......... you will have all the risks i mentioned earlier. 

Do not get me wrong, i am not trying to talk down the stock. I am also a shareholder. 
My aim is to sound out a word of caution.... the stock price has gone up very quickly in a short space of time and these 'hot' money can move away just as quickly on any hint of bad news.................. 


(vested)

Level 13,

In a normal situation your points are correct.
For a Multi-Level-Marketing (MLM) Company it is quite different.

In a normal company, when a license is granted the company has to start from that point onward but for Best World, an MLM Company, she will convert all her existing agents and its network of beauty salon owners into their network distributors and this can be enormous!

Not many people factor this in because not many people knows how an MLM works.

BTW, I'm not with Best World. I'm in another Network and the 2 ladies & Mr Huang know that. 
Reply
Hi level13,
 
It is always good to have diversity of views and I understand where you are coming from.
 
True, stock price has gone up very quickly in a short space of time and there could be many possible explanations to it………….
 
But you seem to have attributed this to “hot money at work”. This is one possible explanation
 
If this were the case then I am agreeable to the high possibilities that these hot money can move away just as quickly at anytime - without hint of any sort at all.
 
FY2015 EPS of 6 cents was achieved without a DS license. A valuation using average peer PE ratio of 17.1 (as adopted in the CIMB report) would value BWI at SGD 1.03 a share.
 
Share price was at 38.5 cents at FY2015 results announcement date. It closed at 90 cents yesterday. Another possible explanation to it is : this stock has simply been re-rated closer to its peers (as measured by the peers PE ratio).
 
CIMB’s TP of 97 cents EXCLUDE the impact of a DS license in China
______________________________________________________________________________________________
 
CIMB report dated 21 April 2016:
TP of S$0.97; further upside exists from China direct selling license
We initiate coverage on BWL with an Add and TP of S$0.97, based on 10.6x CY17 P/E (0.5 s.d. above historical mean). The stock is cheap. At the current 8.7x CY16 P/E, the stock trades at a 50% discount to peers’ average of 17.1x but with higher EPS growth. Our forecasts also exclude the impact of a direct selling licence in China, which we expect will provide further upside and potentially add 21% to our TP (or a TP of S$1.17). BWL has net cash/share of 21 Scts (c.1/3 of market cap) and offers a 4% yield.
_____________________________________________________________________________________________________________

No one knows if a DS license in China would ultimately be granted to BWZ.........

And no one knows when it would be granted, if it were to be granted..........................

It is not an easy feat to quantify how much upside would the granting of a China DS license to BWI add to its share price.

And it is equally hard to quantify how much of this has been factored in the current share price............

Overvalued, under-valued, fair-valued ? Who knows?

All these add to the "fun" of being vested in BWI, isn't it ? 
___________________________________________________________________________________________________________________
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.
Reply
1Q2016 results (Released on 11 May 2016)
 
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 =   35.226     (= X % of FY2016 Revenue)
 
1Q2016 revenue of 35.226 is the highest 1Q revenue and second highest quarterly revenue ever achieved. It was 14% lower than 4Q2015, the highest quarterly revenue ever achieved.
 
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.
 
If X = 25% => annualized FY2016 = 140.904 m which will be a new group revenue record (vs FY2015 revenue of 101.672m and record revenue of 102.180 m achieved in 2007)  
 
If X < 25%, FY2016 revenue would be even higher……….
 
1Q Revenue (SGD million):
1Q2007 = 19.267
1Q2008 = 25.495
1Q2009 = 18.976
1Q2010 = 11.526
1Q2011 =   9.308
1Q2012 =   9.326
1Q2013 =   9.022
1Q2014 = 12.802
1Q2015 = 13.507
1Q2016 = 35.226
(Highest 1Q revenue of all time)
 
NPAT / EPS
1Q2014 = 0.121 m / 0.06 cent
2Q2014 = 0.758 m / 0.34 cent
3Q2014 = 1.123 m / 0.51 cent
4Q2014 = 2.052 m / 0.93 cent
1Q2015 = 0.249 m / 0.11 cent
2Q2015 = 2.106 m / 0.96 cent
3Q2015 = 4.035 m / 1.83 cent
4Q2015 = 3.714 m / 1.69 cent
1Q2016 = 5.963 m / 2.71 cent
 
(1Q2016 NPAT/EPS of 5.963 m/2.71 cent = 59% of FY2015 NPAT/EPS of 10.104m / 4.59 cent)
Impressive ! 

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%
2Q2015 = 75.8% /10.0%
3Q2015 = 77.1% /15.4%
4Q2015 = 74.8% / 9.1%
1Q2016 = 75.5% /16.9%
 
Huge improvement in NPM to 16.9% - impressive !
 
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 =  20.221     (=  Y % of FY2016 Revenue)
 
Highest ever 1Q revenue and second highest ever quarterly revenue for Taiwan.
 
If Y = 25% => annualized FY 2016 Taiwan revenue = SGD 80.884 which is more than SGD 75 m (TWD1,800 m), BWL Taiwan’s FY2016 revenue target.
 
If Y < 25%, FY2016 revenue would be even higher………
 
China Revenue (SGD million)
1Q2014 = 2.195
2Q2014 = 3.296
3Q2014 = 3.117
4Q2014 = 4.372
1Q2015 = 3.088
2Q2015 = 5.366
3Q2015 = 4.805
4Q2015 = 6.512
1Q2016 =10.566
 
1Q2016 China revenue is 242.2% higher than 1Q2015 and 62.3% higher than 4Q2015
 _________________________________________________________________________

An excellent set of 1Q2016 results – better than my expectation. 
 
FY2016 looks on course to be a record-breaking year in many aspects, I reckon.
_____________________________________________________________________________
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.
Reply
(11-05-2016, 10:44 PM)Boon Wrote: 1Q2016 results (Released on 11 May 2016)
 
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 =   35.226     (= X % of FY2016 Revenue)
 
1Q2016 revenue of 35.226 is the highest 1Q revenue and second highest quarterly revenue ever achieved. It was 14% lower than 4Q2015, the highest quarterly revenue ever achieved.
 
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.
 
If X = 25% => annualized FY2016 = 140.904 m which will be a new group revenue record (vs FY2015 revenue of 101.672m and record revenue of 102.180 m achieved in 2007)  
 
If X < 25%, FY2016 revenue would be even higher……….
 
1Q Revenue (SGD million):
1Q2007 = 19.267
1Q2008 = 25.495
1Q2009 = 18.976
1Q2010 = 11.526
1Q2011 =   9.308
1Q2012 =   9.326
1Q2013 =   9.022
1Q2014 = 12.802
1Q2015 = 13.507
1Q2016 = 35.226
(Highest 1Q revenue of all time)
 
NPAT / EPS
1Q2014 = 0.121 m / 0.06 cent
2Q2014 = 0.758 m / 0.34 cent
3Q2014 = 1.123 m / 0.51 cent
4Q2014 = 2.052 m / 0.93 cent
1Q2015 = 0.249 m / 0.11 cent
2Q2015 = 2.106 m / 0.96 cent
3Q2015 = 4.035 m / 1.83 cent
4Q2015 = 3.714 m / 1.69 cent
1Q2016 = 5.963 m / 2.71 cent
 
(1Q2016 NPAT/EPS of 5.963 m/2.71 cent = 59% of FY2015 NPAT/EPS of 10.104m / 4.59 cent)
Impressive ! 

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%
2Q2015 = 75.8% /10.0%
3Q2015 = 77.1% /15.4%
4Q2015 = 74.8% / 9.1%
1Q2016 = 75.5% /16.9%
 
Huge improvement in NPM to 16.9% - impressive !
 
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 =  20.221     (=  Y % of FY2016 Revenue)
 
Highest ever 1Q revenue and second highest ever quarterly revenue for Taiwan.
 
If Y = 25% => annualized FY 2016 Taiwan revenue = SGD 80.884 which is more than SGD 75 m (TWD1,800 m), BWL Taiwan’s FY2016 revenue target.
 
If Y < 25%, FY2016 revenue would be even higher………
 
China Revenue (SGD million)
1Q2014 = 2.195
2Q2014 = 3.296
3Q2014 = 3.117
4Q2014 = 4.372
1Q2015 = 3.088
2Q2015 = 5.366
3Q2015 = 4.805
4Q2015 = 6.512
1Q2016 =10.566
 
1Q2016 China revenue is 242.2% higher than 1Q2015 and 62.3% higher than 4Q2015
 _________________________________________________________________________

An excellent set of 1Q2016 results – better than my expectation. 
 
FY2016 looks on course to be a record-breaking year in many aspects, I reckon.
_____________________________________________________________________________

The 1st Quarter result: $5M+ for a quarter! No Bad!

In year 2006 & 2007 the Whole Year Net Profit were between $12M to $13M and the share prices were traded around $1.10 per share.

Now with the expectation of getting the Direct Selling License from China, we can expect a lot more excitement.
Reply
(11-05-2016, 11:25 PM)Retired@52 Wrote: [quote pid='129304' dateline='1462977851']

The 1st Quarter result: $5M+ for a quarter! No Bad!

In year 2006 & 2007 the Whole Year Net Profit were between $12M to $13M and the share prices were traded around $1.10 per share.

Now with the expectation of getting the Direct Selling License from China, we can expect a lot more excitement.

[/quote]

Just a note of caution...there was a bonus issue in 2007.... not sure the $1.10 price mentioned above has been adjusted for this exercise. Otherwise current share price should be higher than 2007... Nevertheless..1Q results were really good.
Reply
(11-05-2016, 11:25 PM)Retired@52 Wrote:
(11-05-2016, 10:44 PM)Boon Wrote: 1Q2016 results (Released on 11 May 2016)
 
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 =   35.226     (= X % of FY2016 Revenue)
 
1Q2016 revenue of 35.226 is the highest 1Q revenue and second highest quarterly revenue ever achieved. It was 14% lower than 4Q2015, the highest quarterly revenue ever achieved.
 
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.
 
If X = 25% => annualized FY2016 = 140.904 m which will be a new group revenue record (vs FY2015 revenue of 101.672m and record revenue of 102.180 m achieved in 2007)  
 
If X < 25%, FY2016 revenue would be even higher……….
 
1Q Revenue (SGD million):
1Q2007 = 19.267
1Q2008 = 25.495
1Q2009 = 18.976
1Q2010 = 11.526
1Q2011 =   9.308
1Q2012 =   9.326
1Q2013 =   9.022
1Q2014 = 12.802
1Q2015 = 13.507
1Q2016 = 35.226
(Highest 1Q revenue of all time)
 
NPAT / EPS
1Q2014 = 0.121 m / 0.06 cent
2Q2014 = 0.758 m / 0.34 cent
3Q2014 = 1.123 m / 0.51 cent
4Q2014 = 2.052 m / 0.93 cent
1Q2015 = 0.249 m / 0.11 cent
2Q2015 = 2.106 m / 0.96 cent
3Q2015 = 4.035 m / 1.83 cent
4Q2015 = 3.714 m / 1.69 cent
1Q2016 = 5.963 m / 2.71 cent
 
(1Q2016 NPAT/EPS of 5.963 m/2.71 cent = 59% of FY2015 NPAT/EPS of 10.104m / 4.59 cent)
Impressive ! 

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%
2Q2015 = 75.8% /10.0%
3Q2015 = 77.1% /15.4%
4Q2015 = 74.8% / 9.1%
1Q2016 = 75.5% /16.9%
 
Huge improvement in NPM to 16.9% - impressive !
 
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 =  20.221     (=  Y % of FY2016 Revenue)
 
Highest ever 1Q revenue and second highest ever quarterly revenue for Taiwan.
 
If Y = 25% => annualized FY 2016 Taiwan revenue = SGD 80.884 which is more than SGD 75 m (TWD1,800 m), BWL Taiwan’s FY2016 revenue target.
 
If Y < 25%, FY2016 revenue would be even higher………
 
China Revenue (SGD million)
1Q2014 = 2.195
2Q2014 = 3.296
3Q2014 = 3.117
4Q2014 = 4.372
1Q2015 = 3.088
2Q2015 = 5.366
3Q2015 = 4.805
4Q2015 = 6.512
1Q2016 =10.566
 
1Q2016 China revenue is 242.2% higher than 1Q2015 and 62.3% higher than 4Q2015
 _________________________________________________________________________

An excellent set of 1Q2016 results – better than my expectation. 
 
FY2016 looks on course to be a record-breaking year in many aspects, I reckon.
_____________________________________________________________________________

The 1st Quarter result: $5M+ for a quarter! No Bad!

In year 2006 & 2007 the Whole Year Net Profit were between $12M to $13M and the share prices were traded around $1.10 per share.

Now with the expectation of getting the Direct Selling License from China, we can expect a lot more excitement.

Hi Retired@52,
 
I think the conditions back then were different.
 
In 2006/2007, BWI was just exploring at how to enter the China market.
 
Now it has two foots set in China via the wholesale/manufacturing mode and the export mode.
 
In addition, the DS license application has reached its final stage of the application process, now awaiting for approval from the Chinese central government.
 
Also, as you have try to emphasize earlier, a point which I believe many still don’t fully appreciate is the “export mode” could immediately be converted into “DS mode “, upon granting of a DS license, by converting all importing agents and its network of beauty salon owners into DS network distributors. 
 
1Q2016 China revenue was SGD 10.556 m of which SGD 0.957m was under wholesale/manufacturing mode, meaning sales under export mode was SGD 9.6 m.
 
Annualized FY2016 China export sale = 4 x 9.6 m = SGD 38.4 m
 
i.e. revenue booked by BWI would be SGD 38.4 m (under export mode)
 
DS price roughly equals 2 to 3 times export price. Lets assume 2.5 times.
 
If the above SGD 38.4 m export sale were to be operated under DS mode:
 
i.e. revenue booked by BWI would be SGD 96 m ( = 38.4 x 2.5 ).
 
SGD 40 m (export sales) => SGD 100m (sales under DS mode)
SGD 80 m (export sales) => SGD 200 m (sales under DS mode)
 
Very significant impact it would have, once the DS license is being granted.

The good news is the export sales to China is growing fast:

"In 1Q2016, the Group recorded a 242.2% increase in its revenue from China, primarily due to higher export orders from our China agent. In line with Management’s expectation, there is an increase demand for our skin care line of products in China. Management remains cautiously optimistic about the growing demands for the Group’s brands by Chinese consumers for the next few quarters." 

A growing export sales to China is excellent 
A growing export sales, with a 2 to 3 times multiplier to it would be a very significant game changer event...........................
____________________________________________________________________________________________________________________ 
 
Without a DS being granted in FY2016,
 
For FY2016:
Assume X = 25%
Annualized FY2016 revenue = SGD 140.904
Assuming NPM of 15%
ðNPAT = SGD 21.1 m
ðEPS = SGD 9.6 cents
 
Using share price of 90 cents, => PE = 9.4 ( vs average peer PE of 17.1)
 
Over-valued, under-valued, or fair-valued? 
___________________________________________________________________________________________________________________
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.
Reply
(12-05-2016, 11:00 AM)Boon Wrote:
(11-05-2016, 11:25 PM)Retired@52 Wrote:
(11-05-2016, 10:44 PM)Boon Wrote: 1Q2016 results (Released on 11 May 2016)
 
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 =   35.226     (= X % of FY2016 Revenue)
 
1Q2016 revenue of 35.226 is the highest 1Q revenue and second highest quarterly revenue ever achieved. It was 14% lower than 4Q2015, the highest quarterly revenue ever achieved.
 
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.
 
If X = 25% => annualized FY2016 = 140.904 m which will be a new group revenue record (vs FY2015 revenue of 101.672m and record revenue of 102.180 m achieved in 2007)  
 
If X < 25%, FY2016 revenue would be even higher……….
 
1Q Revenue (SGD million):
1Q2007 = 19.267
1Q2008 = 25.495
1Q2009 = 18.976
1Q2010 = 11.526
1Q2011 =   9.308
1Q2012 =   9.326
1Q2013 =   9.022
1Q2014 = 12.802
1Q2015 = 13.507
1Q2016 = 35.226
(Highest 1Q revenue of all time)
 
NPAT / EPS
1Q2014 = 0.121 m / 0.06 cent
2Q2014 = 0.758 m / 0.34 cent
3Q2014 = 1.123 m / 0.51 cent
4Q2014 = 2.052 m / 0.93 cent
1Q2015 = 0.249 m / 0.11 cent
2Q2015 = 2.106 m / 0.96 cent
3Q2015 = 4.035 m / 1.83 cent
4Q2015 = 3.714 m / 1.69 cent
1Q2016 = 5.963 m / 2.71 cent
 
(1Q2016 NPAT/EPS of 5.963 m/2.71 cent = 59% of FY2015 NPAT/EPS of 10.104m / 4.59 cent)
Impressive ! 

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%
2Q2015 = 75.8% /10.0%
3Q2015 = 77.1% /15.4%
4Q2015 = 74.8% / 9.1%
1Q2016 = 75.5% /16.9%
 
Huge improvement in NPM to 16.9% - impressive !
 
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 =  20.221     (=  Y % of FY2016 Revenue)
 
Highest ever 1Q revenue and second highest ever quarterly revenue for Taiwan.
 
If Y = 25% => annualized FY 2016 Taiwan revenue = SGD 80.884 which is more than SGD 75 m (TWD1,800 m), BWL Taiwan’s FY2016 revenue target.
 
If Y < 25%, FY2016 revenue would be even higher………
 
China Revenue (SGD million)
1Q2014 = 2.195
2Q2014 = 3.296
3Q2014 = 3.117
4Q2014 = 4.372
1Q2015 = 3.088
2Q2015 = 5.366
3Q2015 = 4.805
4Q2015 = 6.512
1Q2016 =10.566
 
1Q2016 China revenue is 242.2% higher than 1Q2015 and 62.3% higher than 4Q2015
 _________________________________________________________________________

An excellent set of 1Q2016 results – better than my expectation. 
 
FY2016 looks on course to be a record-breaking year in many aspects, I reckon.
_____________________________________________________________________________

The 1st Quarter result: $5M+ for a quarter! No Bad!

In year 2006 & 2007 the Whole Year Net Profit were between $12M to $13M and the share prices were traded around $1.10 per share.

Now with the expectation of getting the Direct Selling License from China, we can expect a lot more excitement.

Hi Retired@52,
 
I think the conditions back then were different.
 
In 2006/2007, BWI was just exploring at how to enter the China market.
 
Now it has two foots set in China via the wholesale/manufacturing mode and the export mode.
 
In addition, the DS license application has reached its final stage of the application process, now awaiting for approval from the Chinese central government.
 
Also, as you have try to emphasize earlier, a point which I believe many still don’t fully appreciate is the “export mode” could immediately be converted into “DS mode “, upon granting of a DS license, by converting all importing agents and its network of beauty salon owners into DS network distributors. 
 
1Q2016 China revenue was SGD 10.556 m of which SGD 0.957m was under wholesale/manufacturing mode, meaning sales under export mode was SGD 9.6 m.
 
Annualized FY2016 China export sale = 4 x 9.6 m = SGD 38.4 m
 
i.e. revenue booked by BWI would be SGD 38.4 m (under export mode)
 
DS price roughly equals 2 to 3 times export price. Lets assume 2.5 times.
 
If the above SGD 38.4 m export sale were to be operated under DS mode:
 
i.e. revenue booked by BWI would be SGD 96 m ( = 38.4 x 2.5 ).
 
SGD 40 m (export sales) => SGD 100m (sales under DS mode)
SGD 80 m (export sales) => SGD 200 m (sales under DS mode)
 
Very significant impact it would have, once the DS license is being granted.

The good news is the export sales to China is growing fast:

"In 1Q2016, the Group recorded a 242.2% increase in its revenue from China, primarily due to higher export orders from our China agent. In line with Management’s expectation, there is an increase demand for our skin care line of products in China. Management remains cautiously optimistic about the growing demands for the Group’s brands by Chinese consumers for the next few quarters." 

A growing export sales to China is excellent 
A growing export sales, with a 2 to 3 times multiplier to it would be a very significant game changer event...........................
____________________________________________________________________________________________________________________ 
 
Without a DS being granted in FY2016,
 
For FY2016:
Assume X = 25%
Annualized FY2016 revenue = SGD 140.904
Assuming NPM of 15%
ðNPAT = SGD 21.1 m
ðEPS = SGD 9.6 cents
 
Using share price of 90 cents, => PE = 9.4 ( vs average peer PE of 17.1)
 
Over-valued, under-valued, or fair-valued? 
___________________________________________________________________________________________________________________

Hi Boon,

I'm always impressed by your analytical skill & the figures you put up. I concur with your analysis.

Lets enjoy the ride!
Reply
I got to know this stock from Boon's post. Thank you Boon.

Let's do a simple reality check on Boon projection, with an assumptions. The price to final consumers, should remain the same, in the shift from export, to Direct Selling channel. In other words, Best World and the Saloon Owners/Distributors, will re-balance their shares, during the channel shift. I am skeptical, Best World can keep all the gains from the shift, on the expense of the down-line Saloon Owners/Distributors, without any damage on the relationship.

I do agree the company, is more scale-able, than the existing export channel, once the license approved.

What do you think?

(not vested, but monitoring)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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