L-R: Best World executive director Huang Ban Chin | Best World distributor Irene Li (silver director) | CIMB analyst Jonathan Siow | Sheryl Sim and Meei-Yueh (Financial PR).A CIMB analyst and I recently went with Best World executive director Huang Ban Chin on a trip to check out its operations in Taiwan. Several takeaways:
1. Potential of Taiwan market: At a recent award ceremony for Direct Selling Companies in the country, it was noted that many distributors from other companies who went up on stage were in their 50s and 60s. This was not the case for Best World.
At least 70% of Best World's distributors are 35 and below. Being younger, they have more energy and motivation to gain market share in the country's direct selling market in the next few years.
2) Awards for Best World: At the first Asia Pacific Direct Selling summit organised by the Taiwan Association of Multilevel Marketing, R.O.C. (http://www.twamlm.org.tw/), Best World was awarded "亚太风云品牌直销企业奖 " and its skincare brand DR's. Secret was awarded "亚太优质名牌产品将".
Watch this video (2 min 36 secs) on the award ceremony -->
As Best World currently doesn’t have a huge SKU, there are plenty of opportunities for it to build up its product lines. (http://m.nownews.com/news/2228877).
Best World was also awarded, on 4th Sept, for exemplary performance over the last 10 years: It has not had any dispute at all with its distributors and other direct selling companies. The award in its first year was given out by the 公平交易委员会 (Fair Trade Commission), a government organisation. This underscores the high quality of service that Best World provides.
3) Scalable business: In direct selling, operators don’t advertise products in conventional ways. Distributors organise a lot of events to engage existing members/ expand their membership. These distributors (who also receive training) work in a system network and are independent, and run their events without the Company’s help. Thus, the business is very scalable.
4) Best World's sign-up process: Direct selling is highly regulated in Taiwan. Every new member who signs up has to provide his/her IC (which will be photocopied and submitted together with the registration form) with his/her bank account details.
| Stock price | $1.49 |
| 52-week range | 14.4 c -$1.67 |
| PE (ttm) | 19 |
| Market cap | S$412 million |
| Shares outstanding | 276.4 million |
| Dividend yield (ttm) |
1.88% |
| Source: Bloomberg |
The physical copies have to be kept in the Company for 10 years and are routinely checked/ randomly audited by the 公平交易委员会 (Fair Trade Commission). Since the start of the year, the Company has been audited three times. All forms are checked to make sure they are duly filled and signed.
5). Peak season: Usually in October and Nov, the Taiwan office will have a promo in conjunction with its anniversary. Sales usually peak during this two-month period (contributing usually about 30% of Best World's TWD revenue). This year is the 10th anniversary which will be celebrated on 12-13 November.
6) A peek into Taipei and Taichung offices -->
(Note: The higher floor of the Taichung office was renovated last Nov while the lower floor, just last month)
Look out for Part 2 of my report next week.
