2019 will mark the first full year in which the company is using the franchise model, which could be a catalyst for sales growth and margin expansion. In addition, sales growth in other geographies could also improve the company’s profit this year.
After the large share-price fall, the company trades at a very reasonable valuation. Best World’s share price is at S$2.58 at the time of writing. This is still well below the all-time high price of S$3.33 and could be a good entry point for potential investors. The share price of S$2.58 gives rise to a price-to-earnings multiple of 19.4. I see it as a reasonable price to pay for a company that has been growing at a double-digit pace for the past few years.
Best World is also an asset-light company that generates significant returns on equity. As of 31 December 2018, it is sitting on a S$195 million net cash position, giving it a stable balance sheet. The trailing dividend yield of 2.4% should also provide investors with more confidence in the reliability of the company’s sales and earnings figures.
"Boon" at Valuebuddies.com has been tearing the Bonitas report into pieces.
Read his posts for entertainment before Best World provides its own response coupled with (hopefully) strong 1Q19 results in a few days time. Well done Boon!
No Fraud
Bonitas alleges that the Founders engaged in a fraudulent scheme to profit from the Company by grossly overstating the Founders’ dividend entitlements and suggesting such dividend payments were made through increasing outstanding payments (i.e., trade and other payables).
Our Response:
(a) Overstatement of dividends
The Company declared S$90.9 million of dividends from FY2010 to FY2018. The
Report falsely alleges that the Founders received approximately S$74.4 million in
dividends from FY2010 to FY2018.
This would require the Founders to own 81.8%of the Company’s shares from FY2010 to FY2018, which is plainly untrue.
The author of the Report has either miscalculated the Founders’ collective ownership of the Company, or deliberately misstated the dividend amounts received by the Founders.
really, this is one of the things that point to Bonitas Research's basic flaws. either that or they were malicious.
to think that their team is made up of analysts apparently educated in Cambridge lah, NYU lah, etc.
The suit against Bonitas is a wake-up call for short-sellers & reporters. Bonitas repeatedly wrote that Best World is a fraud, engaged in fraudulent activities, etc, and now will have a hard time defending itself considering BW's rebuttal. The damages payable are potentially huge. Can Bonitas pay?
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