Hot stock: Best World shares plunge as much as 25.8% as trading resumes

BEST World International shares plunged as much as 25.8 per cent on Monday before clawing back some gains as trading resumed after a halt that lasted almost five days last week.

The direct-selling company, which also sells premium skincare products to franchisees in China, said over the weekend that it will order an independent review of its business and accounting practices, after The Business Times raised questions about the lack of clarity on how its franchisees operate in China.

Best World said it has conducted its business ethically and in compliance with applicable laws, but "is not responsible for the accounting and sales records of the franchisees, who are independent third parties".

In any case, it has decided to "voluntarily" appoint an independent reviewer to address the issues and "provide additional comfort and assurance to shareholders", Best World said over the weekend.

Heavy selling ensued as investors mulled the uncertainties surrounding Best World's rapid expansion in China, which had underpinned its high valuations.

The stock gapped down to open at S$2.60 on Monday, down 11 Singapore cents or 4.06 per cent from S$2.71, where it last traded a week ago before trading was halted pending clarification of BT's questions.

Some 18.6 million shares had changed hands as at 11.30am, with the counter down 50 Singapore cents or 18.45 per cent at S$2.21.

The shares swung wildly from a low of S$2.01 to a high of S$2.65 in the early session, as some punters jumped out while others jumped in on hopes of a possible dividend bump as Best World will soon release results for its fourth quarter, typically its strongest quarter.

Best World is in a blackout period until its fourth-quarter results are released after trading hours on Tuesday. Till then, the company is unable to conduct share buy-backs.