Will Best World do a Hyflux? Investors of Best World must be horrified as the counter collapsed from a high of $3.30 in February 2019 to the current $1.62. Within the span of two months, Best World share price plunged by more than 50%. Both Best World and Hyflux were founded by female business leaders, namely Doreen Tan and Olivia Lum respectively. Incidentally both are home-grown companies facing some sort of troubles lately. Nonetheless, the similarities ended there. Let’s take a look whether Best World is a falling knife in the making.
For the records, Best World is a Singaporean company that specializes in direct selling and franchising of premium skincare, personal care, nutritional and wellness products. It is definitely not an S-chip company awaiting to implode. Many investors may have this wrong perception probably because of its recent China misadventure. More on that later. What I am emphasizing here is that it is important for investors to have a basic understanding of Best World’s business profile, the unique business model and its competitive edge before making judgements.
What is direct selling and is it considered multi-level marketing (MLM) or pyramid marketing, both of which are illegal in Singapore and China? But if MLM is really illegal, why is it that Best World can do business here and even got listed in SGX? In this article, I will share the legal framework for multi-level marketing and how it affects Best World business model. I suspect many people don’t really understand much about such marketing strategy, thus giving rise to the confusion over the recent China sales issue.
On the other hand, investors must be aware that big boys (fund houses and short sellers) are punting this counter. This explains the volatility of Best World share price. However, this does not mean that Best World is a toxic stock to avoid but what it really means is that investors must be careful of the risks involved and set reasonable entry and exit levels. You can make quick money from Best World; but you may also lose your pants investing in Best World as well.
Troubles come in troops for Best World
Actually, Best World enjoyed some sort of fairy tale run as its share price stormed from $0.10 in 2016 to the peak of $3.30 in early 2019. That was some crazy run as the surge represented a 33-fold in Best World share price within the span of only three years! Indeed, the splendid performance of Best World had created tremendous wealth for plenty of investors.
On looking back, the meteoric rise of Best World share price in the latter half of 2018 should be attributed to the aggressive buying from institutional fund houses. The big boys had bought into this counter and made it the top ten institutional net buy stocks in December (+$14million), November (+$98.5million) and (+$19.1million).
But as the saying goes, good things never last. This is often the case for SGX stocks. Things started to unravel when [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
In a bid to raise financial literacy and reward SG Wealth Builder members, I am pleased to launch the Best SGX stock research campaign. Winner of this contest gets to receive cash prize of $1000!
The rationale for launching this activity is to level the playing field for retail investors, who often lack access to quality SGX stock research, especially homegrown SME stocks. Through this SGX stock research campaign, I hope to raise interest in SGX stocks among local investors, and at the same time, encourage members to share ideas and showcase their analytic skills. The winning entry will be published in this blog for learning purposes.
The winning SGX stock research article must cover a stock that is listed in Singapore Exchange (SGX) and should be engaging and interesting to read. From a story-telling perspective, you can share your best or worst SGX stock investments and what valuable lessons that can be gleaned. Ideally, the article should also contain data to back up the thesis and provides insightful analysis.
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