Best World International Limited’s Stock Is Up 242% In One Year: How Does It Makes Its Money?
Best World International Limited (SGX: CGN) has been a huge winner in Singapore’s stock market over the past year with its stock price climbing by 242%.
Its strong performance caught my eye and made me curious to learn more about the business. Here’s what I found about the company’s revenue streams.
Best World is a direct-selling company that deals with a wide range of healthcare products. It currently has operations in 12 markets in Asia. In the middle of 2016, the company was awarded a direct-selling license in China.
The largest geographical source of revenue for Best World in 2016 was Taiwan, which accounted for 61.3% of total revenue. China was in second spot at 28.8%.
Summary of revenue
The table below shows the revenues from Best World’s three business segments – Direct Selling, Export, and Manufacturing/Wholesale – in 2016 and 2015:
Source: Company 2016 full year earnings
The Direct Selling segment was the biggest revenue contributor to Best World in 2016, accounting for 70.9% of the company’s revenue for the year.
This segment deals with sales to customers through – what else? -direct selling channels in many countries in the Asia Pacific region, including Singapore, Malaysia, Indonesia, Thailand, Taiwan, Hong Kong, Vietnam, Philippines, Korea, Australia and the United Arab Emirates.
As for the Export Sales segment, this is where Best World sells to customers through retailers in China and Myanmar. This was the fastest growing segment in 2016 – as you can see from the table above – due to increased demand from China.
The last segment, Manufacturing/Wholesale, comprises Best World’s wholesale business in China.
A Foolish Conclusion
Although there are a number of moving parts when it comes to Best World’s business, investors may want to focus on the two key segments: Direct Selling and Export Sales.
And within the two segments, there are two major geographies to pay attention to, namely, Taiwan (from the Direct Selling segment), and China (from the Export Sales segment; and perhaps soon, also from the Direct Selling segment given the aforementioned license grant).
By understanding how Best World earns its revenue, investors can better understand the economics of its business model and in turn, make a better judgement on the long-term prospects of the company.