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  "docSlug": "1c836eeb374c",
  "documentTitle": "Monolithic Power Systems (MPWR)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "presentationDate": "2019-10-09 00:00:00",
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  "notes": "The slide uses a 'discrepancy' framing to suggest potential financial misreporting or fraud.",
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      "text": "Where is the $100-$136m of year end inventory reported at the consolidated level if none of it is being reported to the tax authorities in China?",
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      "kind": "list",
      "text": "Chengdu Monolithic Power Systems Co., Ltd.: Principal facility consisting of a design base, sales and marketing, and a warehouse\nMPS International Ltd. (Shanghai): The Shanghai company does sales and marketing.\nHangzhou MPS Semiconductor Technology Ltd.: In Hangzhou, the company does application design.",
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      "text": "China Revenue: $261.7m",
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      "text": "Through a Chinese attorneys, we obtained tax filings for MPWR’s three Chinese subsidiaries. Assuming no inter-company sales, the three subsidiaries together reported ~$73m in gross revenues and 35.9% gross margin in 2018: 78% lower sales and gross margins 1,970bps lower. Despite our estimate that 90% of production occurs in China, the Chinese entities reported almost no inventory. Where is the $100-$136m of year end inventory reported at the consolidated level if none of it is being reported to the tax authorities in China?",
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      "kind": "source-note",
      "text": "Source: MPWR’s SEC filings and Chinese Tax Filings. Note: China RMB depreciated ~5% in 2018. 1) Subsidiaries disclosed as Exhibit 21.1 to 10-K. 2) China gross margins are from Chengdu while margins reported to investors are consolidated Non-GAAP. 3) Reported inventories at the consolidated level as MPWR doesn’t report inventory by geography",
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      "text": "Comparison table of China Revenue, Gross Margin, and Inventories for 2017-2018 across Local Tax Bureaus vs U.S. Investors.",
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      "text": "Enormous Discrepancy In China Sales And Inventory",
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