Best World has obtained the coveted approval from Ministry of Commerce (MOFCOM) to conduct direct selling in Hangzhou city, China.
The multi-channel distributor expects conversion of the current export business in China to shift incrementally to direct selling over 2017. Maybank KE expects the group to scale up its China operations at a faster pace, with membership base expected to be larger in the months ahead.
Further, Best World intends to expand its geographical coverage of its direct selling licence to the other regions in China to tap the mammoth potential of the country's direct selling market.
As a gauge, 80 direct selling licences have been approved to-date by MOFCOM since 2006, with 29 licences issued to foreign enterprises. In 2015, direct selling companies in China registered sales growth of 19% to US$35.5b, just behind US, the world's largest market, of US$36.1b (+4.8%).
Best World remains under-researched. Increasing market discovery, ROE expansion and scaling up in China could re-rate the stock closer to its peer P/E, where most have China presence and notable market share.
Maybank KE has a Buy with TP of $2.16, implying a 60% upside from the current price.