Best World

[Boon]

Seems to me that further upside from a DS license being granted in China has yet to be factored in.
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The fact that they have been talking about the DS license for the past 2 yrs. If that indeed happen, it will be a non - event.  

Whether the license can bring them further upside remains to be seen, for it will be subjected to execution, implementation and operational risks.

What is your timeline expectation to have a DS license approved in China? Less than 2 years?
 
The acquisition of Solid Gold (subsequently renamed Best World Zhejiang or BWZ) was completed at end of Feb 2014. With that (a GMP factory), BWZ was eligible to apply for a DS license in China.
 
Management guided that it had taken the Group 9 months (March 2014 to Dec 2014) to get to the final stage in the application process – a process that normally takes 2.5 years. 
 
The application is currently waiting for approval from the central government.
 
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What is your interpretation of the following statements in bold? These are upsides that could be immediately executed upon granting of a DS license?
 
From AR2015:
“In FY2015, our business in China grew by 52.3%, as demand for our product lines continues to build. Barring any unforeseen circumstances, we believe our license could be approved in the next 12 to 16 months, upon which, we will convert our agent and its network of beauty salon owners into our network distributors, marking another significant growth phase of our business in China. “
 
From CIMB report:
China could be a game changer
“The other catalyst is the company successfully obtaining a direct selling licence in China (management expects 4Q16-1H17). China is currently the group’s second largest market (19% of FY15 sales, +52% yoy), with the bulk of sales coming from exporting products to local agents. The potential therefore comes from converting these exports to sales under a direct selling model, which could double sales in China as selling prices to distributors are significantly higher than export prices.”
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