DOCSLIB.ORG

Boom Or Bust? N G [email protected] E

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Boom Or Bust? N G Horng.Han.Low@Clsa.Com E 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. 12M hi/lo S$3.30/1.20 Revisiting our May 2017 cautious view on Taiwan 12M price target S$1.75 ±% potential -20% We expressed concerns in May 2017 - despite BW delivering above-consensus estimates (thanks to China) - due to an unexpected slowdown in Taiwan. We attributed the sharp Shares in issue 554.4m Free float (est.) 45.0% slowdown to inventory overbuild among distributors. Sales in Taiwan have yet to recover from 2017-18 levels despite BW’s efforts to improve its market positioning. Market cap US$892m 3M ADV US$7.7m Red flags in China as consumer interest trails revenue outperformance Foreign s'holding 60.0% China is now BW’s key market (54% of revenue). A stronger-than-expected 4Q18 implies momentum in 2019 will continue, but we are concerned the issues faced in Major shareholders D2 Investments Pte Ltd 35.0% Indonesia and Taiwan could repeat. Our online study on the Chinese market using Baidu/WeChat Trends API, however, indicates weak consumer interest (proxy via the number of domestic searches) on BW and its product, Dr’s Secret (晳之密). China, being a relatively new market, explains its strong performance as they expand distributors during the initial phase, but the significant gap between consumer interest and revenue Blended ESG Score (%)* implies momentum could stall once the number of distributors reaches saturation. Overall 64.7 Country average 69.3 Retain SELL with new S$1.75 target GEM sector average 64.0 *Click to visit company page on clsa.com for details Our revised estimates suggest a strong 2019 (16% above Bloomberg consensus as earnings could surprise) before a decline in 2020-21 (32-44% below as end demand sell- Stock performance (%) through could be challenged). Our S$1.75 target is based on 12x PE (avg 19-21CL EPS). 1M 3M 12M Absolute (5.6) (16.3) 20.2 Financials Relative (6.5) (21.0) 26.8 Year to 31 December 17A 18A 19CL 20CL 21CL Abs (US$) (5.6) (15.8) 16.3 Revenue (S$m) 215 266 476 380 375 3.4 (S$) (%) 300 Rev forecast change (%) - - 74.4 24.7 - 250 Net profit (S$m) 56 73 105 70 64 2.8 200 NP forecast change (%) - - 70.0 (4.0) - EPS (S¢) 10.1 13.3 19.2 12.8 11.7 2.2 150 CL/consensus (3) (EPS%) - - 132 80 69 100 1.5 EPS growth (% YoY) 61.2 31.1 44.7 (33.4) (8.2) 50 PE (x) 21.7 16.6 11.5 17.2 18.7 0.9 0 Dividend yield (%) 1.9 2.8 3.0 2.3 2.3 Apr-17 Oct-17 Apr-18 Oct-18 Best World (LHS) ROE (%) 50.6 48.1 49.6 25.7 19.6 Rel to STI (RHS) Net debt/equity (%) (63.2) (115.4) (65.6) (66.5) (67.8) Source: Bloomberg Consensus numbers from Thomson Reuters. Source: www.clsa.com Find CLSA research on Bloomberg, Thomson Reuters, Factset and CapitalIQ - and profit from our evalu@tor proprietary database at clsa.com For important disclosures please refer to page 22. Boom or bust? Best World - SELL Financials at a glance Year to 31 December 2017A 2018A 2019CL (% YoY) 2020CL 2021CL Profit & Loss (S$m) Revenue 215 266 476 78.8 380 375 Cogs (ex-D&A) (64) (56) (116) (101) (107) Gross Profit (ex-D&A) 151 210 360 71.5 278 268 SG&A and other expenses (75) (115) (219) (182) (178) Op Ebitda 76 95 141 48.3 97 90 Depreciation/amortisation (5) (3) (3) (5) (6) Op Ebit 71 93 138 48.9 92 84 Net interest inc/(exp) 0 1 0 (76.3) 0 0 Other non-Op items (4) 0 (1) (1) 0 Profit before tax 68 93 137 47.6 92 84 Taxation (13) (21) (31) (21) (19) Profit after tax 55 73 107 46.8 71 65 Minority interest 1 0 (1) (1) (1) Net profit 56 73 105 44.7 70 64 Adjusted profit 59 73 106 45 71 65 Cashflow (S$m) 2017A 2018A 2019CL (% YoY) 2020CL 2021CL Operating profit 71 93 138 48.9 92 84 Depreciation/amortisation 5 3 3 24.4 5 6 Working capital changes (3) 71 (111) (9) (7) Other items (16) (15) (32) (21) (20) Net operating cashflow 57 150 (1) 67 64 Capital expenditure - - - - - Free cashflow 57 150 (1) 67 64 M&A/Others (11) (1) (7) (6) (6) Net investing cashflow (11) (1) (7) (6) (6) Increase in loans 0 (5) 0 0 0 Dividends (17) (27) (36) (27) (27) Net equity raised/other (4) (1) 1 (4) (1) Net financing cashflow (20) (34) (35) (32) (29) Incr/(decr) in net cash 25 115 (43) 29 29 Exch rate movements 8 8 8 0 8 8 Balance sheet (S$m) 2017A 2018A 2019CL (% YoY) 2020CL 2021CL Cash & equivalents 82 197 154 (21.8) 183 212 Accounts receivable 47 5 26 399.8 26 31 Other current assets 43 63 80 28.2 86 89 Fixed assets 8 8 16 90.6 20 22 Investments 0 0 0 0 0 Intangible assets 13 12 10 (18.8) 9 8 Other non-current assets 3 3 4 35.3 4 4 Total assets 196 288 290 0.6 327 367 Short-term debt - - - - - Accounts payable 46 95 33 (65.7) 29 31 Other current liabs 17 21 21 0 21 21 Long-term debt/CBs 2 - - - - Provisions/other LT liabs 4 2 2 0 2 2 Shareholder funds 130 174 252 44.9 296 361 Minorities/other equity (3) (3) (17) (20) (48) Total liabs & equity 196 288 290 0.6 327 367 Ratio analysis 2017A 2018A 2019CL (% YoY) 2020CL 2021CL Revenue growth (% YoY) 7.0 24.0 78.8 (20.2) (1.4) Ebitda margin (%) 35.3 35.7 29.6 25.5 24.1 Ebit margin (%) 33.1 34.7 28.9 24.2 22.5 Net profit growth (%) 61.0 30.9 44.7 (33.4) (8.2) Op cashflow growth (% YoY) 183.2 162.7 (100.8) nm (4.3) Capex/sales (%) - - - - - Net debt/equity (%) (63.2) (115.4) (65.6) (66.5) (67.8) Net debt/Ebitda (x) - - - - - ROE (%) 50.6 48.1 49.6 25.7 19.6 ROIC (%) 126.2 556.8 369.1 80.7 66.6 Source: www.clsa.com 2 April 2019 [email protected] 2 Boom or bust? Best World - SELL Boom or bust? Figure 1 Best World’s growth is Best World - Revenue by country over 2005 to 2018 historically anchored to 300 growth in one country. (S$'mil) Indonesia Taiwan China Others Sales in 2006-2007 were primarily driven by 250 Indonesia Similar growth trajectory 200 Strong growth generated during in Taiwan, before an Subsequently, Taiwan drove 2006-07 in Indonesia. Recovery unexpected decline in group’s revenue in 2014- 150 efforts fail to ignite sales growth FY17 2016 before it declined despite GDP recovering unexpectedly 100 Revenue in both countries has failed to recover 50 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source: CLSA Figure 2 The boom-bust experienced Best World - Indonesia sales have failed to recover post financial crisis despite GDP recovering in Indonesia reveals the 50 (S$'mil) 50% challenges to sustaining Indonesia revenue (LHS) Indonesia % of total revenue (RHS) revenue momentum. Despite 45 45% a strong distributorship and 40 40% GDP recovering, sales have 35 35% failed to recover 30 30% Attempts to strengthen the 25 25% product mix, by adhering to 20 20% the regulatory changes in 15 15% 2009, did not deliver results 10 10% 5 5% 0 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Source: CLSA Figure 3 We observe a similar pattern Best World - Taiwan sales growth decline in 2017 with Taiwan. Revenue growth between 2014-16 140 (S$'mil) Taiwan revenue (LHS) Taiwan % of total revenue (RHS) 70% was due to successful recruitment of distributors 120 60% Decline in 2017 (sales fell 100 50% 29% YoY) was unexpected and started in 1Q17.
Load more

Recommended publications
  • Lista Operatorilor Economici Prevăzuți La Art. 16, Alin
    LISTA OPERATORILOR ECONOMICI PREVĂZUȚI LA ART. 16, ALIN. (3) DIN LEGEA NR.249/2015 ACTUALIZATA LA 05.04.2018 Cod Unic de Denumire contribuabil Înregistrare Fiscală 1ENERGY BEST SOLUTION 34652262 A C SOFA DESIGNE SRL 34198779 A EOL SRL SRL 11158856 A&C ELECTRIC-TECH SRL 31505259 ABI WOOD SRL 33684673 AC FASHION RETAIL SRL 38271600 AC PEARL TRADING SRL 36222199 ACART PREST SRL 18734352 ACCES CONTROL ELECTRIC SRL SRL 28581981 Access Data Media Service SRL 33044020 ADECOR PROD SRL 28493251 ADF INDUSTRIES SRL 12257840 ADMINA PRODCOM SRL 15662928 ADMIRAL LEISURE SRL 38078686 ADRILEX IMP.EXP. 17263010 ADVA HOME DESIGN SRL 25420069 ADYASV SRL 18748943 AETHER SOLUTION SRL 32806470 AG INSTAL DISTRIBUTION SRL 38375890 AGRI TOCAN SRL 26426345 AGRICOLA GIRUETA S.R.L. 27816656 AGRIPPA DESIGN&ADVERTISING SNC 26779770 AGRITEHNICA MARA SRL 30227197 AGRIZOOTEK SRL 34070973 AGROMAD PEST SRL 37578810 AGROMANIA SRL 14206940 AGROSEMCU SRL 15501204 AGROWEST-BMB SRL 20919255 AGRO-YUGOROM SRL 28984658 Airsoftmegastore SRL 34743859 ALASCHRAM IMPORT EXPORT SRL 36946353 ALASKA ENERGIES SRL 32179819 ALBANI SOLUTIONS SRL 30511945 ALCA FASHION STORE 38292859 ALEVAN SRL 24366263 ALEX GAMA IMPEX SRL 24844007 ALEXER SRL 17035747 ALFACANINEXPERT SRL 35242775 ALICANTE 1994 SRL 32597323 ALISVERIS SRL 18243010 ALIZ METAB SRL 14757388 ALMINA DOLD SRL 31042049 ALPACCESS SRL 15810340 ALPO INVEST GRUP SRL 36506972 ALUTRUCK SRL 13105483 AMALIA FASHION SRL 905360 AMB 93 PRODEXIM SRL 3144132 ANAVYS GROUP SRL 24118195 ANBANC 26398580 ANDREEA TINCU SRL 29387054 ANDREI & DOLY 31706163
    [Show full text]
  • Spec 2012 1409 Layout 1
    журнал для людей, знающих себе цену SINAMATI сетевой маркетинг и прямые продажи Сетевой маркетинг в России— Спецвыпуск 20лет SINAMATI. Журнал о сетевом маркетинге Ежемесячно: – 30 новых статей от практиков российского сетевого маркетинга — лидеров сетевых компаний; – аудиобеседы и видеоролики на актуальные темы; – подписка на рассылку «Сетевой маркетинг в России». www.sinamati.com Обращение к читателям Дорогие друзья! Перед вами специальный выпуск журнала «SINAMATI. Сетевой маркетинг и прямые продажи», посвященный двадцатилетнему юбилею сетевого маркетинга в России. Определить точную дату появления самого первого россий- ского сетевика, конечно, не представляется возможным, но об- щеизвестно, что в самом начале 90-х годов XX века в России появилась продукция компании Herbalife и первые дистрибью- торы, которые занимались ее распространением и созданием ди- стрибьюторских сетей. С тех пор прошло около 20-ти лет, и в настоящее время в Рос- сии работает множество сетевых компаний, а количество людей, занятых сетевым маркетингом, исчисляется миллионами. Идеи сетевого маркетинга и возможности, которые дает этот бизнес, привлекают все больше и больше предпринимателей. Сетевой маркетинг занял свое место в экономике нашей страны, продол- жает развиваться и крепнуть. И, на мой взгляд, настало время под- вести некоторые промежуточные итоги, проанализировать путь, по которому прошел сетевой бизнес в России, и обозначить пер- спективы его дальнейшего развития. Открывает этот выпуск журнала моя обзорная статья, в ко- торой я изложил свой взгляд на историю сетевого маркетинга, который у меня сложился в результате многолетнего общения с ру- ководителями и топ-лидерами многих российских и зарубежных сетевых компаний, а также работы бизнес-тренером в этих ком- паниях. Также в журнале размещены точки зрения экспертов, которые являются признанными авторитетами на сетевом пространстве, и мнения руководителей MLM-компаний.
    [Show full text]
  • A Study on Factors Affecting Network Marketer's
    A STUDY ON FACTORS AFFECTING NETWORK MARKETER’S ENTREPRENEURIAL PERFORMANCE IN ETHIOPIA By: Tekle Asfaw ID GSE/0859/06 Advisor: Dr. Rekshit Negi A Research Project Submitted to the School of Commerce Department of Marketing Management, Addis Ababa University in partial fulfillment of the requirements for The Degree of Master of Arts in Marketing Management. Addis Ababa University School of Graduate Studies Department of Marketing Management May, 2016 Addis Ababa, Ethiopia Addis Ababa University School of Graduate Studies Department of Marketing Management STUDY ON FACTORS AFFECTING NETWORK MARKETER’S ENTREPRENEURIAL PERFORMANCE IN ETHIOPIA By: Tekle Asfaw Advisor: Dr. Rekshit Negi A Research Project Submitted to the School of Commerce Department of Marketing Management, Addis Ababa University in partial fulfillment of the requirements for The Degree of Master of Arts in Marketing Management. May, 2016 Addis Ababa, Ethiopia Statement of Declaration I hereby declare that Factors affecting Network Marketers’ entrepreneurial performance in Ethiopia is project which wholly was the work of Tekle Asfaw. I have carried out the present study independently with the guidance and support of the research advisor, Dr. Rekshit Negi. Any other contributors or sources have either been referenced in the prescribed manner or are listed in the acknowledgements together with the nature and the scope of their contribution. And the study has not been submitted for award of any Degree or Diploma Program in this or any other Institution. _________________________ Tekle Asfaw Date: May, 2016 I APPROVAL This is to certify that this thesis entitled “Factors Affecting Network Marketers’ Entrepreneurial Performance in Ethiopia” submitted in partial fulfillment of the requirement for the award of the Degree of Masters of Arts in Marketing Management, submitted to Addis Ababa University School of Commerce department of Marketing Management which was done by Tekle Asfaw is an authentic work carried out by him under my guidance.
    [Show full text]
  • DSA – 2013 AGM Booklet
    Annual General Meeting 2013 To be held at: Lawrence Graham Solicitors 4 More London Riverside London SE1 2AU Thursday 21st November 2013 DSA - 2013 AGM Booklet.indd 1 04/11/2013 14:14 Vision Statement “To create a meaningful image of our Association, credibility and delivery in support of all our members and external opinion formers.” Contents 3 2013 Notice of Annual General Meeting 4 Governance and Membership 5 Chairman’s Report 6 Director’s Report 8 Code Administrator’s Report 10 Financial Statement 14 History of the DSA 15 List of Members 2 DSA - 2013 AGM Booklet.indd 2 04/11/2013 14:14 2013 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the 47th ANNUAL GENERAL MEETING (“AGM”) of THE DIRECT SELLING ASSOCIATION will be held at 12.00 midday, on Thursday 21st November 2013 at the offices of LG (Lawrence Graham) Solicitors, 4 More London Riverside, London SE1 2AU for the following purposes:- Agenda 1. To receive the Chairman’s report. 2. To receive and adopt the Report and Accounts for the year ended 30th June 2013. 3. To elect Council Members. 4. To re-appoint auditors to the company and authorise the Directors to fix their remuneration. 5. To approve changes to the DSA Code of Practice for Consumers to reflect changes resulting from the implementation of the Consumer Rights Directive. 6. To consider any other business. Dated 30th October 2013 By Order of the Council PAUL SOUTHWORTH Director General Election to Council 1. Under the DSA Constitution, one third of Council retires annually by rotation.
    [Show full text]
  • Analisis Pemasaran Multi Level Marketing Pada
    ANALISIS PEMASARAN MULTI LEVEL MARKETING PADA PERUSAHAAN TIENS INTERNATIONAL GROUP CORP. MENURUT PANDANGAN EKONOMI ISLAM Skripsi Diajukan untuk Persyaratan Memperoleh Gelar Sarjana Ekonomi Syariah (SE.Sy) Oleh : Dehen Pantar Nusantara NIM : 105046101629 KONSENTRASI PERBANKAN SYARIAH PROGRAM STUDI MUAMALAT FAKULTAS SYARIAH DAN HUKUM UNIVERSITAS ISLAM NEGERI SYARIF HIDAYATULLAH JAKARTA 1431 H / 2010 M “ANALISIS PEMASARAN MULTI LEVEL MARKETING PADA PERUSAHAAN TIENS GROUP CORP. MENURUT PANDANGAN EKONOMI ISLAM” Skripsi Diajukan Untuk Memenuhi Persyaratan Memperoleh Gelar Sarjana Ekonomi Syariah (S.E.Sy) Oleh : Dehen Pantar Nusantara NIM : 105046101629 Dibawah Bimbingan : Pembimbing I Pembimbing II (Drs. H. Burhanuddin Yusuf M.M.) (Hendra Pertaminawati M.A.) NIP. 195406161301031005 NIP. 197009282005012003 KONSENTRASI PERBANKAN SYARIAH PROGRAM STUDI MUAMALAT FAKULTAS SYARIAH DAN HUKUM UNIVERSITAS ISLAM NEGERI SYARIF HIDAYATULLAH JAKARTA 1431 H / 2010 SURAT PERNYATAAN Dengan ini saya menyatakan bahwa : 1. Skripsi ini merupakan hasil karya asli saya yang diajukan sebagai penelitian dan untuk memenuhi salah satu persyaratan guna memperoleh gelar strata I di Universitas Islam Negeri Syarif Hidayatullah Jakarta 2. Semua sumber yang saya gunakan dalam penulisan ini telah saya cantumkan sesuai dengan ketentuan yang berlaku di Universitas Islam Negeri Syarif Hidayatullah Jakarta. 3. Jika dikemudian hari terbukti bahwa karya ini bukan hasil karya asli saya, atau merupakan hasil jiplakan dari karya orang lain, maka saya bersedia menerima sanksi yang berlaku di Universitas Negeri Syarif Hidayatullah Jakarta. Jakarta, 18 Mei 2010 Dehen Pantar Nusantara ABSTRAK Tujuan dari penelitian ini adalah untuk mengetahui dan menjabarkan kepada masyarakat praktek dari bisnis Multi Level Marketing menurut pandangan syariah, dan sebagai penambah wawasan bagi masyarakat agar dapat lebih jeli dalam berbisnis agar tidak terjerumus dalam bisnis permainan uang (money game) dan juga tidak terjebak kepada bisnis yang syubhat.
    [Show full text]
  • Best World Corporate Presentation CIMB NDR W/O Valuation
    Corporate Presentation Financial year 2016 & First half 2017 The presentation herein may contain forward looking statements by the management of Best World International Ltd (BWI) that pertain to expectations for financial performance of future periods vs past periods. Such forward looking statements involve certain risks and uncertainties as they relate to future events. Actual results may vary materially from those targeted, expected or projected due to various factors. Such factors are, among others, general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management’s representation on the future performance of BWI. Therefore, the actual performance of BWI may differ significantly from expressions provided herein. The reader is cautioned to not unduly rely on these forward-looking statements. Neither the Group nor its advisers and representatives shall have any liability whatsoever for any loss arising, whether directly or indirectly, from any use or distribution of this presentation or its contents. This presentation is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in BWI. Corporate Presentation Welcome to Best World Overview of our business About Best World Business Model & Strategy Growth Areas 1H2017 Financial Highlights About Best World Our Vision To be one of the Global Leading Health and Wellness company dedicated to creaVng products that enhance the lives of our customers. 3 About Best World Company Milestone July 2004 2016 Best World became the Direct Selling first direct-selling license in China, company to be public Hangzhou listed on the Singapore Stock Exchange.
    [Show full text]
  • Annual General Meeting 2012
    Annual General Meeting 2012 To be held at: Lawrence Graham Solicitors 4 More London Riverside London SE1 2AU Thursday 22nd November 2012 2012 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the 46th ANNUAL GENERAL MEETING (“AGM”) of THE DIRECT SELLING ASSOCIATION will be held at 12.00 midday, on Thursday 22nd November 2012 at the offices of LG (Lawrence Graham) Solicitors, 4 More London Riverside, London SE1 2AU for the following purposes:- Vision Statement Agenda “To create a meaningful image of our Association, credibility and 1. To receive the Chairman’s report. delivery in support of all our members and external opinion formers.” 2. To receive and adopt the Report and Accounts for the year ended 30th June 2012. 3. To elect Council Members. 4. To re-appoint auditors to the company and authorise the Directors to fix their remuneration. 5. To consider any other business. Dated 31st October 2012 By Order of the Council Contents PAUL SOUTHWORTH Director General 3 2012 Notice of Annual General Meeting 4 Governance and Membership Election to Council 5 Chairman’s Report 1. Under the DSA Constitution, one third of Council retires annually by rotation. This year Lorna Hunt and Helen van Wengen resigned and do not wish to stand. Ric Hobby offers himself for re-election, which 6 Director’s Report Council recommends. 8 Code Administrator’s Report Also this year the Council decided to fill not only the two resignation posts as above but also two vacancies. Following several nominations received, the Council recommends the appointment of Penny Farish, Mike 10 Financial Statement Roberts, Simon Burke and Tony Chaplin.
    [Show full text]