Singapore health and beauty giant Best World International faces the worst of times from short-sellers
- A series of allegations from traders have rocked one of the island nation’s biggest firms, erasing more than US$734 million from its market value
- Best World has refuted claims of unlicensed direct selling in China, and that it overstated earnings from its operations in the country
Singapore-listed Best World International is locked in a major battle with two short-sellers – traders who bet on a company’s falling stock price – who have alleged that it engages in questionable sales and accounting practices.
The company, which was valued at S$1.8 billion on the stock market as recently as February, shot back by calling the allegations baseless.
Best World was a stock market darling after it saw profits grow at a rapid clip over the past five years. The company logged a net profit of S$55.7 million in 2017, an increase of more than 39 times from 2013.
A big part of this vault forward came from its China operations, which Best World said made up more than half of its net profit. But because of the lack of clarity over how it generates sales in China, analysts believe this success could well be its undoing.
On April 24, United States-based Bonitas Research, which was founded by Matthew Wiechert last year, released a report titled “Short Best World” alleging that the company continues to operate a multilevel-marketing model to sell its products – a form of direct selling that is highly regulated in China – even though it does not have a licence to do so.
