Best World

there is a post by sweeswee in investing note about the PhD of 2D. ppl who are interested can go take a read and investigate then judge yourself.

to be fair without photos from shorts on the shops they visit. how would anyone get the opportunity to see? if shorts profit from their research is bad then what about analysts who wrote positive articles? shorts need to incur time costs and expenses to investigate stuffs also. trying asking the auditors to perform foc on the checks for sake of public service.

there are so many multi baggers in the world. why would they choose this company? no sane person will spend days, weeks or even months to investigate and intention is to write rubbish.

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https://www.meipian.cn/63n341h
 
There was a 7th anniversary celebration for this Huaihua BWL lifestyles centre in September 2016, implying it existed since 2009. How could that be ?
 
https://www.meipian.cn/7izm9o3
 
It was 2016, don’t you think D2/HBC were “in too deep” with the then one customer “export model” ? 
 
https://www.meipian.cn/7w31d1l
 
From “Huaihua” to “Guiyang”, the seed of growth had been sown………………….. system 663 at work perhaps…………………
 
https://www.meipian.cn/budikm3
 
A “separate” award ceremony for the China region to so many recipients. How could that be under a ONE customer “Export model”?
 
(Note: you need to click at the end of page to read each full article).
 

Hi everyone,

Long time no see.

Since day one, this counter in our group of veteran investors think it not for long-term investing.

One among us has had so called "insider news".

We all think at that time this is a "Hit & Run" counter.

It is a matter of months but now since years because China is too big too follow up on investigations by "Short Seller" specialists?

i think our so called insider-news trader has made quite a lot but we all dare not participate except inside-news trader.

We all think it is matter of time short seller specialist company or someone manages to expose something.

This is only our/my opinion nothing about facts at that the time of the company venturing into China.

YMMV.

https://m.tianyancha.com/company/1535904400

Click 行政处罚

决定书文号：怀工商案字【2015】15号
类型：违反对组织者或者经营者通过发展人员，要求被发展人员发展其他人员加入，形成上下线关系，并以下线的销售业绩为依据计算和给付上线报酬，牟取非法利益的组织策划传销人员的行政处罚
处罚内容：罚款50.1000万元，没收违法所得和非法财物10.0185万元，null
决定日期：2015-05-12
决定机关：怀化市工商行政管理局
法人：邓美娟

If this DMJ is the same SDA we are talking about. It means the distributor get fined not BWI ......ha-ha!

Boon, as usual can dig out amazing stuff, great job !    
Being accomplished in chinese is good for analyzing BW.

Just for info, for all buddies, the BW pdt licences and franchisees are listed in mofcom page : http://txjy.syggs.mofcom.gov.cn/manager/...id=6652565
This shd allay concerns on BW operating without appropriate licences in China.

PS : Unable to copy and paste screen capture here as I encountered some system msg like too many characters ....

Changsha Best (长沙百世特威日用品贸易有限公司)
 
BR claims to have identified the import agent under the Export Model to be Changsha Best.
 
Here is the available information on Changsha Best from the official government website. 
 
http://hn.gsxt.gov.cn/%7B13C2BCF474A44D7...6315244%7D
 
It is fully owned by a Sole Foreign Investor, NOT a Sino-Foreign JV as claimed by BR, based on a few job advertisements of the company found in various online job site, whose info seem inaccurate, and should not be relied upon IMO.

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(30-04-2019, 09:55 AM)Boon Wrote: Changsha Best (长沙百世特威日用品贸易有限公司)
 
BR claims to have identified the import agent under the Export Model to be Changsha Best.
 
Here is the available information on Changsha Best from the official government website. 
 
http://hn.gsxt.gov.cn/%7B13C2BCF474A44D7...6315244%7D
 
It is fully owned by a Sole Foreign Investor, NOT a Sino-Foreign JV as claimed by BR, based on a few job advertisements of the company found in various online job site, whose info seem inaccurate, and should not be relied upon IMO.

Page 6 of BR’s report:
“We can understand why Changsha Best employees think they work for Best World. Changsha Best’s online job postings disclosed itself as being a branch of Best World Singapore. In another job posting, Changsha Best was described as the predecessor of BWL China’s Hunan Branch. In the third job posting, Changsha Best introduced itself as a Sino-foreign joint venture primarily engaged in international trade, import & export of cosmetics and dietary supplements, and that its parent company was listed on the main board of a foreign stock exchange.”
 
Footnote 3 on page 6 of BR’s report:
“3 SAIC filing shows that BWL China established a branch in Changsha in May 2017“ 
____________________________________________ 
 
Is Changsha Best a Sino-Foreign JV?  
 
NO
 
Could Changsha Best be the predecessor of BWL China’s Hunan Branch?
 
Changsha Best was established on 09-July-2014 
 
BWL China (Hunan Branch) was established on 10 May 2017
http://hn.gsxt.gov.cn/corp-query-search-1.html
 
How could one company be deemed a predecessor of another and yet BOTH exist at the same time SINCE May 2017 – Ha-ha!
 
Is Changsha Best a branch of BWI?
 
From official records/filings, it doesn’t appear so, regardless of what the job posting says which could be a mistake (like Sino-Foreign JV) or a misrepresentation

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BR claims that “Changsha Best is an entity Best World management secretly controlled and exclusively created to be Best World’s off-books China counterparty.” (page 1)
 
BR claims that “Changsha Best disgorged all of its retained earnings since inception to Best Word upon termination of its business with Best World in 2018! Clearly not the actions of an independent party.” (page 5)
 
BR claims that “as evidence of further collusion between related parties, upon termination of its relationship with Best World, Changsha Best paid 100% of its accumulated undistributed profits since inception to Best World in the form of trademark fees in 2018! (page 11)
 
BR query “What kind of independent party pays nearly 100% of accumulated profits upon termination of its agency arrangement? In our opinion, not an independent party.” (page 11)
 
BWI reported that “Other Operating Income, increased by 681.8% to $9.1 million in 3Q2018 mainly due to a one-time trademark royalty fee received from our China agent in 3Q2018 prior to the termination of the agency arrangement. For the nine months ended 30 September 2018, Other Operating Income increased by 220.8% to $17.4 million mainly due to the above trademark royalty fee received as well as service fees relating to market development services, trainings and IT services” (page 14 of 3Q2018 results).
 
The sum we are talking about is SGD 9.1 m.

It was Changsha Best’s China profit (hence after paying China tax), as claimed by BR.

BR didn’t mention the 9.1 m was being part of the “fake profit fabrication”. Presumably they believe it was real.
 
If it were real, it would certainly have boosted BWI’s 3Q/FY2018 top and bottom line.
 
The 9.1 m (ignoring Singapore tax), if distributed as additional dividend, D2 would get about 46% of it only, the rest would go to the remaining shareholders. 
 
The 9.1 m could NOT be paid ENTIRELY as additional bonus to D2 as I believe their bonus is capped at a certain FRACTION of net profit (NOT 100%).
 
If Changsha Best were indeed an entity secretly controlled by D2 (or the management), they would have certainly kept the entire 9.1 m in Changsha Best for themselves, I believe.
 
What kind of fraudsters would share it with shareholders whom they have set out to cheat in the first place? Ha-ha!
 

Wah, can even dig out such info. Really regretted neglecting my Chinese during school days - feel very handicapped in research.

Based on the BT Clarification doc, "it largely worked with one primary Import Agent in promoting its products in China (the “Primary Import Agent”). In doing so, the Group had direct contact with the Primary Import Agent’s customers while providing them with product expertise support and competency training. The Group worked with the Primary Import Agent on developing a base of customers in China including wholesalers, retail outlets and individual customers with diverse backgrounds and changing composition overthe years. During this time, a number of these wholesalers and retailers started distributing the Products exclusively."

Assuming the Pimary Import Agent is indeed Changsha Best(CB), it plays a very key role in BW's China expansion and is probably well-connected or has a significant network of customers. It seems without CB, BW wldn't be so successful in China today. But it is kind of strange that a relatively unknown company headed by a non-local Chinese wld be able to make such a significant contribution to BW's success - I wld think there must be more than meets the eye. To me, this is material information.  

With regards to the JV job advert, it cld be due to some mis-comunication or how some wordings are phrased in local Chinese context, since it was also stated on the same doc that "To ease the transition fromthe Export Model to the Franchise Model, the Group also hired certain employees from the Primary Import Agent who were familiar with the Group’s operations under the Export Model. "

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To add on to my post, I found this website : http://shuidi.cn/company-5350b70b9a36c01...73686.html   regarding 长沙百世特威日用品贸易有限公司 which states that there are 2 other people in the company(presumbly local Chinese ?) :
言卫军  总经理
王继先  监事

Thanks Boon and Dreamybear for the fact digging to show the false information written by Bonitas Research.

It probably took a lot of time for both of you to read and decipher the Chinese to reveal interesting but truthful facts of Best world, to disprove the (probably) unfactual aspects of Bonitas Report.

To help our readers view it as a single post instead of multiple posts, I have merged Boon's post into one and Dreamybear's post into "another one".

Once again, thank you for the fact finding

BW has direct selling license to sell health supplement in Hangzhou but not skin-care products. That point is clear.
What is not so clear are:
Is BW involved in direct selling (namely face-to-face instead of through shops) of its skin-care products?
Is the Lifestyle Centre purportedly franchisee a shop or a training centre?