SINGAPORE (Dec 5): Best World's ambition to corner 5% of China's RMB193 billion ($29 billion) skincare market by 2020 is “ambitious”, says Maybank Kim Eng after a non-deal road show of the firm.
At present, the direct-selling skincare, health supplement & wellness product firm has less than 1% of the China market but is looking to expand into more cities and tapping into digital and social media, the research house notes.
To achieve this ambitious goal, which requires sales growth of around 80% for FY18-20, Best World will expand into more cities across China, says analyst John Cheong in a Monday report.
Last quarter, Best World reported a 10% fall in revenue. Since August, its shares are down nearly a quarter, cutting the year's surge to 87%.
The application for a direct-selling licence beyond Hangzhou City has already started and should include at least seven provinces by end of next year.
Cities in Hunan province are expected to be approved first, followed by other provinces. In addition, Best World will continue to focus on its key strategies, especially in promoting good skincare products with unique selling propositions.
Best World also demonstrated how its distributors adopt social media such as WeChat and Facebook as well as video to share and promote its skincare products, says Cheong.
According to Best World, the number of followers for its WeChat and Facebook account have more than tripled since Feb to more than 24,000.
It also demonstrated the application of its newly-developed mobile app, launched in Taiwan, which makes ordering of goods easier. The app will be launched in more markets soon.
Elsewhere, Best World is exploring to growth in Indonesia and venturing into new markets like Japan and India in future. But for Taiwan, its second largest market, Best World has halted promotions to prevent discounted sales by distributors.
“We should see a gradual recovery from 2018 onwards due to the low base and after weeding out discounted goods,” says Cheong.
Maybank is maintaining its “buy” call on the stock with target price of $1.88, based on 19x FY18 earnings.
As at 11.57am, the counter is down 1 cent at $1.24.