Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>While our potential universe includes a broad range of branded consumer companies across the market capitalization, one corner of that universe that we have done a lot of work on over the years involves those companies utilizing a direct selling business model, which deploys a sales force of independent contractors to get their products in the hands of consumers.</li><li>The top trend we are monitoring for 2025 is the impact that the burgeoning market for GLP-1 drugs has on the weight loss stocks.</li><li>Two pure-play weight- loss names we monitor, MED and WW, have already been severely affected by the disruption caused by the GLP-1 drugs and have been on the defensive in recent years.</li></ul>

While our potential universe includes a broad range of branded consumer companies across the market capitalization, one corner of that universe that we have done a lot of work on over the years involves those companies utilizing a direct selling business model, which deploys a sales force of independent contractors to get their products in the hands of consumers.The top trend we are monitoring for 2025 is the impact that the burgeoning market for GLP-1 drugs has on the weight loss stocks.Two pure-play weight- loss names we monitor, MED and WW, have already been severely affected by the disruption caused by the GLP-1 drugs and have been on the defensive in recent years.

2025 Outlook: Focus Is on Top Line - November 13, 2024

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/best-world-international-ltd" target="_blank" data-smartkarma-citation="entities:4600:1" rel="noopener">Best World International (BEST SP)</a> IFA considers the S$2.56 exit offer fair and reasonable as it is towards the upper end of its S$1.36-2.69 per share valuation range. </li>
<li>The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).</li>
<li>The lack of activists, IFA supporting recommendations, and no competing offer suggest a done deal. At the last close, the gross spread was 2.8%.</li>
</ul>


The Best World International (BEST SP) IFA considers the S$2.56 exit offer fair and reasonable as it is towards the upper end of its S$1.36-2.69 per share valuation range. 
The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
The lack of activists, IFA supporting recommendations, and no competing offer suggest a done deal. At the last close, the gross spread was 2.8%.


Best World (BEST SP): EGM Vote on 19 July

<ul>
<li>
<a href="https://www.smartkarma.com/entities/best-world-international-ltd" target="_blank" data-smartkarma-citation="entities:4600:1" rel="noopener">Best World International (BEST SP)</a> has disclosed a revised exit offer which has been declared final. The S$2.56 offer is a modest 2.4% premium to the previous S$2.50 offer. </li>
<li>The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).</li>
<li>The revised offer remains underwhelming. However, the headcount test risk is lowering as retail seems resigned to accepting it. At the last close, the gross spread was 2.4%. </li>
</ul>



Best World International (BEST SP) has disclosed a revised exit offer which has been declared final. The S$2.56 offer is a modest 2.4% premium to the previous S$2.50 offer. 
The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
The revised offer remains underwhelming. However, the headcount test risk is lowering as retail seems resigned to accepting it. At the last close, the gross spread was 2.4%. 


Best World (BEST SP): Best and Final S$2.56 Offer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/best-world-international-ltd" target="_blank" data-smartkarma-citation="entities:4600:1" rel="noopener">Best World International (BEST SP)</a> has disclosed an exit offer through selective capital raising and delisting. The offer of S$2.50 is a 42.9% premium to the undisturbed price of S$1.75. </li>
<li>The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).</li>
<li>The headcount test is a risk. The offer is light as only 66.7% of retained earnings will be distributed and the consideration will be covered 1.6x by the net cash.</li>
</ul>



Best World International (BEST SP) has disclosed an exit offer through selective capital raising and delisting. The offer of S$2.50 is a 42.9% premium to the undisturbed price of S$1.75. 
The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
The headcount test is a risk. The offer is light as only 66.7% of retained earnings will be distributed and the consideration will be covered 1.6x by the net cash.


Best World (BEST SP): Not the Best Exit Offer

<ul><li>Direct selling as a business model has a large global presence.</li><li>According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in 2022.</li><li>Therefore, foreign currency exchange rates can have a significant impact on reported earnings and cash flows for the dollar-based direct selling platforms, such as NUS, HLF, USNA, and LFVN.</li></ul>

Direct selling as a business model has a large global presence.According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in 2022.Therefore, foreign currency exchange rates can have a significant impact on reported earnings and cash flows for the dollar-based direct selling platforms, such as NUS, HLF, USNA, and LFVN.

Direct Sellers - Currency Outlook Remains Mixed

United States

USANA Health Sciences, Inc. develops, manufactures, and markets nutritionals, personal care, and weight management products.  The Company's products are sold directly to preferred customers and distributors throughout the United States, Canada, Australia, New Zealand, the United Kingdom, and Hong Kong.

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Usana Health Sciences (USNA US)

2025 Outlook: Focus Is on Top Line - November 13, 2024

The top trend we are monitoring for 2025 is the impact that the burgeoning market for GLP-1 drugs has on the weight loss stocks.

Water Tower Research

Best World (BEST SP): EGM Vote on 19 July

The lack of activists, IFA supporting recommendations, and no competing offer suggest a done deal. At the last close, the gross spread was 2.8%.

Arun George

Best World (BEST SP): Best and Final S$2.56 Offer

The revised offer remains underwhelming. However, the headcount test risk is lowering as retail seems resigned to accepting it. At the last close,...

Arun George

Best World (BEST SP): Not the Best Exit Offer

The vote is a risk. The offer is light as only 66.7% of retained earnings will be distributed, and the consideration will be covered by 1.6x of the...

Arun George

Direct Sellers - Currency Outlook Remains Mixed

According to the World Federation of Direct Selling Associations (WFDSA), approximately 77% of global direct sales were conducted outside the US in...

Water Tower Research

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