$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.
think the most discriminating is the brother in law. But like to ask hor surname hoan and huan same meh?
Reply to @michaelmlts : maybe missi spelled wrongly.
Took a glance at the independent directors list in Best World. I wonder what they are doing? Kiao kar shake leg?
Reply to @TheMAOZD : Paid well to do nothing... Being kept happy...
When are retail traders going to learn a lesson repeating itself recently?.Good to be informed of reports but do not trade based on report alone. That earning report can be used as toilet papers. Instead of cursing shortists, when one still stubborn do not want to learn to short only has oneself to blame and is missing out potential opportunity to make money when real collapse come. One has to be nimble to move both ways in Trump's era of cowboys market. Price action matter most.
Let them fight it out in court. We watch
The short one never learnt their lessons!
Reply to @lynlynnakamori : +1, now just sideline and watch how it turns out
Avoid, avoid, avoid...
can u afford to tie your money for so long....what if it goes under?
Hong Lim Park got business again soon.
let the festivities begin!!!
lolol
Reply to @ThumbTackInvestor : Set up a carnival
I believe will suspend all the way to AGM liao
Very damaging response.