Best World S$2.20 - SELL C h a Horng Han Low Boom or bust? n g
[email protected] e China growth reminiscent of earlier boom-and-bust experiences i +65 6416 7847 n Best World’s (BW) strong growth has typically been underpinned by a single t a r country: Indonesia had anchored 2006-08 growth before revenue collapsed; g e Taiwan was the focus during 2013-16 before an unexpected decline in 2017. In t p both instances, sales have failed to recover. With China sales surging, r i c momentum in 2019 is set to continue, but we are concerned if the strong growth e is sustainable. This is underscored by results of an online search on Baidu/WeChat, where the direct-selling company’s flagship brand, Dr’s Secret, is ranked much lower than peers. Our revised numbers are below consensus. 2 April 2019 Maintain SELL to a new S$1.75 target (from S$1.29). Singapore The boom-bust experience in Indonesia Consumer Despite a diversified geographical exposure, BW’s strong performance is usually anchored to a single country. Prior to the 2008 crisis, Indonesia had been a key Reuters BEST.SI driver as BW successfully engaged the Indo community in Singapore to distribute Bloomberg BEST SP in Indonesia. Although there were regulatory issues regarding imports in 2009, Priced on 1 April 2019 BW did adapt by enhancing the product mix. However, sales have failed to STI @ 3,250.5 recover despite a recovery in Indonesia’s GDP after the crisis.