Brokers' Take

Best World International
July 28 close: $0.63

WHILE we had initially expected the domestic market to benefit from the newly launched bwl negative ioniser, the growth rate of 50.4 per cent still surprised us a little. The performance far surpassed the management internal target of 20-plus per cent. Hong Kong is also doing extremely well, contributing over 50 per cent of turnover from 'other markets' in its first year of operation.

Almost perfect: Perhaps the only major disappointment in this result was the blip in Indonesia sales. According to management, consumer spending in the country was hard hit by high inflation due to the rising oil prices following the government reduction in the fuel price subsidy. Thailand market remains sluggish, though this is not unexpected as the company has yet to find the right people to drive its distributors and products.

Outlook remains positive: Future growth is more likely to come from product expansion and new market penetration. We understand that an active pipeline of new products is scheduled to roll out in 2H06. In addition, the Taichung Regional Centre will be ready in 3Q06 and should contribute positively to the group's bottom line in view of the favourable environment for direct selling in Taiwan. Looking ahead, the group has mapped out a clear regional strategy to expand into China, South Korea, India and Japan by 2010.

Clinched RHQ status: Best World became the first direct-selling company in Singapore to be conferred RHQ status. Besides the recognition attached to it, this award also offers a concessionary tax rate of 15 per cent for 3+2 years on incremental qualifying income from abroad. As a result, the group's effective tax rate was brought down to 22.2 per cent in 1H06 vis-a-vis 24.1 per cent for FY05.
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- Compiled by MATTHEW PHANM

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