$Best World(CGN.SI)

Very interesting investigative work here:

https://valiantvarriors.wixsite.com/home/n...

In the definition of the Laws, Bestworld was probably not wrong to state that the franchisee/importer was not related to BWL.

BUT, if the article's findings are true (brother in law relation etc), then effectively the PEOPLE in Bestworld and its main franchisee/importer ARE CLOSELY related. This gives rise to possibility of hanky panky transactions etc (I am not saying surely hanky panky, but "possibility" unless proven otherwise) .

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4 comments
SSJ4

china corporate governance.......

kekeke

WK888

Sure got hanky panky one la... Let it drop further!

SallyH

Good investigative work.

Gracian

skali kena takn to court like Bonitas. Lollll


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$Best World(CGN.SI)

Bonitas has rebutted Best World's rebuttal (attached).

Bonitas makes sense to me. Furthermore, they put money in their mouth and declare they are shortists, publish reasons for shorting. I think its fair and they serve a useful function in the market. The amount of research and legwork they put in is beyond most investors, including institutional ones.

Dont forget, Bonitas' reputation is also at stake. They are also building a track record. If shown to be unreliable, in future nobody will give them any credibility.

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$Best World(CGN.SI)

So, company requested for a trading halt after SGX made a query on the trading activities.
The company is likely to refute the Bonitas Research report.
But I note that Bonitas is just one of several research house /investors to have checked on the BWL Lifestyle centres in China and all reported that these centres were merely empty store fronts with little or no sales activities. They also checked around and concluded that brand awareness for DR's Secret skin care products were very poor, definitely not enough to be able to record the sales that BW claimed.

Tellingly, Bonitas highlighted that BW's founders have exponentially accelerated their annual take home pay by a whopping 20x in 5 years. The figures were also a huge percentage of the company's operating cash flows.

Interestingly, all this while, the 2 founders are being addressed as "Dr Hoan" and "Dr Tan"....both proudly listed they have obtained PhD degrees - from "Western Pacific University, USA" and "Canyon College, USA" - respectively.

But an internet search suggests that both these institutions are either non-existent or have been found to be unaccredited or just a degree certificate printer.

https://www.idahopress.com/members/online-...

People who use such dubious sources to claim a "PhD" title and thus be addressed as "Dr" are very likely to be using the titles to give others a FALSE impression of their intelligence and credibility, and to hide other wrongdoings. Such an action alone casts real doubt on the INTEGRITY of the founders.

So over the years, how many people have addressed them as "Dr Dorothy Hoan" and "Dr Doreen Tan"? Hahahahahahahaha..............hahahahahahahahaha

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$Best World(CGN.SI)

CLSA's investigative report on BestWorld yesterday revealed some very telling evidence.

The way I see it, Best World's model in China isn't exactly a typical network marketing one. In a network marketing model (such as Amway, Unicity), company products are primarily distributed directly to individuals, who in turn become a node to form their own distribution network to other individuals.

But in Best World's case, company products are distributed to distributors which act more like wholesalers holding up the stocks. It is up to the distributors how they want to sell the products. It is a pseudo franchise-network marketing model.

When distributors buy products from Best World in bulk, Best World records revenues. That results in very high revenues and growth. But it doesn't mean the products will be consumed by end users. Chances are there is an increasing stockpile at the distributors. Chances are there are clauses in their contracts for distributors to return unsold goods to Best World.

As pointed out by the CLSA report, there is a risk for Best World to repeat its boom-bust cycle, previously in Indonesia and Taiwan. The initial years see very good revenues and profits growth. But the numbers soon collapse when distributors stop buying, return stocks etc.

Despite having fallen from $2.60 recently, I believe there is more downside in the short term. Interestingly, CLSA made a sell call but revised its target price sharply higher from $1.29 to $1.75. This is primarily due to expectation for good 2019 result.

My view is that it will head to $1.50 this round.

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$Best World(CGN.SI)

Another RUMOR that has been going round for some time is this:

BW had asked franchisees in China to buy their shares. Those who bought above a certain amounts would get good credit terms, "case by case" basis. So, instead of paying BW for the products in cash, the Chinese franchisees used the funds to buy BW shares. This could be one reason to explain for the meteoric rise in BW shares over the past 3 years. Demand for BW shares overwhelmed supply.

If the above rumor is true, imagine what happens when things go wrong (like now!) and there is a rush for the exit door. A stampede!

Nevertheless, I wanna emphasize that the above scenario is just a market RUMOR. Not substantiated. Not a fact yet. I just wanna share what I heard.

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