SINGAPORE (Nov 21): Maybank Kim Eng is remaining bullish on Best World International with a “buy” call and a target price of $2.16, after the latter won approval of its direct selling licence in China.

<hr/>(See: <a href="http://www.theedgemarkets.com.sg/sg/article/best-world-international-recognised-direct-selling-company-china" target="_blank">Best World International recognised as direct selling company in China</a>)<hr/>

Analyst John Cheong notes that China is the second largest direct selling market in the world and could accelerate Best World’s future growth.

“In near term, this positive development will enable Best World to scale up via massive recruitment and marketing of its product,” says Cheong.

The direct selling licence will allow Best World to capture more opportunities in China, with a market size of RMB220 billion ($45.5 billion) and a 19% year-on-year growth, notes Cheong. The company also has a good foundation in China, and completed registration for all its products.

Best World will gradually convert its previous export model with distribution to members via a network of beauty, nail and hair salons, and spas all over China into distributors and service centres over several phases.

Best World aims to reach the Top 20 position by 2020 based on revenues in China, notes Cheong. Its sales in China must reach $400 million in order to achieve this, which are more than 8x forecasts for FY16 China sales of $49 million, according to Cheong. Forecast for FY16 now stands at 150% year-on-year growth and 30% growth for FY17 to FY18, according to Cheong.

“Growth momentum in China started to accelerate even before the approval of the direct selling licence, with 9M16 sales rising more than 400% year-on-year,” says Cheong.

Shares of Best World are down 1 cent at $1.37.

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