Best World posts 79% jump in Q1 net profit on strong sales growth

BEST World on Wednesday night posted a 79 per cent jump in net profit for the first quarter to S$10.3 million from S$5.8 million a year ago. The company attributed the performance to strong sales growth across most of the group's markets.

Earnings per share was 1.88 Singapore cents, compared with 1.05 cents in the first quarter of 2018, and revenue more than doubled to S$53.4 million from S$24.5 million in Q1 2018.

Best World said that the outperformance was most pronounced in China due to strong underlying demand for its DR's Secret skincare line and full adoption of its new franchise model.

It added that revenue from China would have been better if not for delays to two re-registrations of new formulas of existing DR's Secret products. Revenue from the sale of these two items will be recognised in Q2 2019 to Q3 2019, when the delivery of the products is completed.

However, Best World's net profit margin fell to 19.4 per cent from 23.5 per cent a year ago. This was attributed to a 98.4 per cent decrease in other operating income and distribution costs more than doubling upon its transition to the franchise model, among other reasons.

No dividend was declared for the quarter under review.

The group said it is cautiously optimistic about achieving growth in both revenue and profit in FY2019, noting that it will register contributions from both its direct-selling and franchise segments for all four quarters. In contrast, its revenue and profit for H1 2018 were entirely contributed by its direct-selling business.

Its outlook for underlying demand for its products remains positive in China, Taiwan, Indonesia, Singapore and other markets. In Indonesia, the company expects the effects of the fasting month in May to be mitigated by "certain market measures" it has taken and its plan to launch BWL iPhone/Android apps in the upcoming quarter.

Trading in Best World shares has been halted since Apr 24.