Share price took a hit yesterday and I believe the 4th query issued by SGX was the main factor.
I accept the first 3 queries from SGX may have its merits when the price moved aggressively up 20 cents level and broke through $1.00. However, as I have said before, BW is no Blumont or Liongold. The tailwinds are a successful growing business model and the potential MLM licence from China.
But this 4th query is not judiciously applied. Share price of BW has reacted positively post MLM licence approval and the subsequent announcement of a new business venture in Dental Stem Cell.
Coming from a Risk Surveillance background myself (former Head of Risk Surveillance of an International Banking Group), I believe (unless SGX has some internal information) the issuance of the 4th query was not justified and has done harm to BW and its shareholders.
Prolife Biobank (PB) is currently engaged in the business of marketing dental stem cell banking services to parents who intend to harvest the stem cells from their children’s milk teeth, offering various dental stem cell biobanking programmes, and arranging for the collection and processing of the shedded milk teeth for stem cells and the storage of such stem cells by third parties on an outsourced basis.
“marketing” and “arranging” => done by PB
“collection”, “processing” & “storage” => outsourced to third parties.
It is an asset-light business in selling “services” rather than selling “products”.
Running costs shouldn’t be high, I reckon
Marketing costs could be high, I would guess, especially in early stages – probably explains why it has yet to be profitable.
Could be very profitable if could reach a critical volume.
Synergies with BWI:
Have access to BWI’s customer base and distribution networks in 12 countries without incurring any marketing costs.
Could leverage on BWI’s support functions => cost saving.
BWI might have the ability and confidence in scaling up this business more quickly and at lower cost or minimal cost than PB doing it alone.
The business has been up and running for about 4 years now and it could potentially be a lucrative business once it is scaled up. The Management of BWI probably recognize this, otherwise they probably would not have invested