SINGAPORE (May 22): DBS Vickers Securities continues to rate Best World International at “buy” with an adjusted target price of $1.65 after hosting the developer, manufacturer and distributor of skincare and wellness products’ non-deal roadshow (NDR) in Hong Kong over May 18-19 last week.
In a Monday report, analyst Ling Lee Keng recalls that most funds at the roadshow were new to Best World, although some were already familiar with the industry and operating environment.
While noting that Best World’s efforts in raising brand awareness and product acceptance in the Chinese market are “beginning to bear fruit”, Ling believes there is multi-year growth potential for the group beyond China with several untapped opportunities offered by several other markets.
This includes merger and acquisition (M&A) opportunities to gain access to markets like Japan, or complementary products and services that could be further marketed via the group’s existing distributed network.
Another opportunity arising from current skincare consumption trends would be niche markets such as halal skincare.
Given how Indonesia passed its Halal Product Certification Bill in Sept 2014 and about 90% of Indonesia’s population estimated to be Muslims, Ling sees a substantial opportunity for the skincare industry post the implementation of the new bill, which could present a possible avenue of growth for Best World.
“To successfully navigate China’s regulatory environment, Best World is still in process of fine-tuning its direct selling model for China, and expects to make a gradual shift from exports to direct selling (from 4Q17) as more cities are added under its direct selling license,” comments Ling.
“Moving forward, the option to expand geographical coverage under its direct selling license lies with Best World. Similar to Hangzhou, the expansion of coverage will mainly entail the setting up one of service outlet per district per city, to be audited by local authorities.”
As at 2:04pm, shares of Best World are trading flat at $1.44.
