SINGAPORE (May 11): CIMB is maintaining its “add” recommendation on Best World (BWL) after another strong quarter, beating consensus expectations by both the research house and Bloomberg.

1Q17 sales doubled, mostly driven by the strong showing in China.

“We are very positive on the strong demand in China for the group’s DR’s Secret skincare solutions and believe this will drive growth for the company over the next two years,” says Jonathan Seow in a Tuesday report.

“Further, China remains a very large market that BWL has yet to fully penetrate. Management is still expanding the geographical coverage of its direct selling licence beyond Hangzhou. Therefore, we continue to see a lot of upside for the group in China,” adds Seow.

Taiwan looks like the only dampener with a 7.6% sales decline. However, this is to be expected coming on the back of two straight years of sales growth in excess of 100% which saw BWL become the 9th largest direct selling company on the island by FY16. That said, a new regional centre will open in 2Q17 along with new product launches.

“This gives us confidence Taiwan’s FY17 sales will pick up. Moreover, 1Q is seasonally weaker,” says Seow.

With a net cash of $50 million as at end March, Seow also does not discount the possibility of the group seeking inorganic growth opportunities, especially to gain access into new markets.

“We lift our FY17-19F EPS by 2-3%, mostly on the back of stronger sales momentum in China. This lifts our target price to $3.05,” says the analyst.

“This is in line with when the stock traded at 15-18x forward P/E during its last earnings upcycle.”

Shares of Best World are up 7 cent at $2.86.