{ "docId": "019dd923-622c-750b-8b98-c99fec0ed8aa", "docSlug": "1c836eeb374c", "documentTitle": "Monolithic Power Systems (MPWR)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-10-09 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 46, "pageCount": 95, "prevPage": 45, "nextPage": 47, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 20, "notes": "Uses a series of quotes from company leadership to set up a contradiction with the subsequent data table.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "data_table" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-c99fec0ed8aa/46", "deckHref": "/decks/019dd923-622c-750b-8b98-c99fec0ed8aa", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-c99fec0ed8aa.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-c99fec0ed8aa#slide-46", "components": [ { "bbox": null, "kind": "callout", "text": "Despite MPWR talking sustainable 40-50% revenue CAGRs, actual results are decelerating fast in H1 2019.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-ee38-728b-98cd-2b1d194b2d24", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Automotive Revenue Growth: 4.6%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-ee38-728b-98cd-319d70fef7c9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "paragraph", "text": "MPWR's tried to diversify into the higher margin auto industry with early success that now appears to be rapidly fading. Auto revenues really started ramping in 2014-15, and per the CEO the design cycle is 3-4 years, it shouldn't be a surprise that auto sales are peaking. Despite MPWR talking sustainable 40-50% revenue CAGRs, actual results are decelerating fast in H1 2019.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4b40f066-2cc9-4230-9423-e7c6876f630d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.15, "y": 0.27 }, "kind": "quote", "text": "We've seen [auto] revenue off of a substantial base doubled in each of the last two years. And we expect to grow, while not at that faster rate, well over 50% for several years to come", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "435147b7-b1a9-44dd-be14-4aa93e8744f9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.15, "y": 0.37 }, "kind": "quote", "text": "Yes, for the automotive in MPS, as you know, we entered the market about 4 or 5 years ago, and 4 or 5 years ago, our revenue almost 0. And even 2, 3 years ago very teeny, teeny, tiny. And it takes a long time to get the revenue. And so design cycle is about 3 to 4 years. And we are total TAM in automotive, it's about $6 billion, probably a little -- now they're more than that. And so what is our percentage? It's less than 1%. So it's a total greenfield for us to grow", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "48430ad7-ca59-4d16-99e4-d5ff8121110c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.15, "y": 0.67 }, "kind": "quote", "text": "The other thing I want to also point out is we're growing so fast, okay? 55% year-on-year growth last year. Take a look at the total semiconductor market in auto. It's about 13%, 4x growth versus the market. And you can see the TAM that we're going after, $7 billion. ...Really, we're at this moment where the opportunity is incredible. MPS happens to be at the right place at the right time. We've learned from the last 5 years of innovation of selling. We understand the customers. We have the great products. We see the growth really continuing over the next 5, 6 years, easily, 40% to 50% CAGR", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9e15f97d-d3ef-4f7c-8912-31c4e67b67ff", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.14, "w": 0.8, "x": 0.15, "y": 0.51 }, "kind": "quote", "text": "Yes, it is fair that the growth rate it will not change much. Okay, but don't quote me exactly what's the rate. It would be very similar to this year. Which applications or which segments, I think in the next couple of years we're going to expand lot more segments. Now the lighting, infotainments and the safeties, and we will have a lot more safety products come out. And as Bernie said in his script, we have an ADAS and also the battery management as well as the connectivities. And those areas have a very little revenue or some of the items have no revenue, only sampling. And we expect to have a very high percentage growth in -- a very dollar amount growth in 2019, '20 and '21", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "de2ab632-8996-4d66-ba8e-78d80be0e7c3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"We've seen [auto] revenue off of a substantial base doubled in each of the last two years. And we expect to grow, while not at that faster rate, well over 50% for several years to come\" — CFO Stifel Conf June 2016; \"Yes, for the automotive in MPS, as you know, we entered the market about 4 or 5 years ago, and 4 or 5 years ago, our revenue almost 0. And even 2, 3 years ago very teeny, teeny, tiny. And it takes a long time to get the revenue. And so design cycle is about 3 to 4 years. And we are total TAM in automotive, it's about $6 billion, probably a little -- now they're more than that. And so what is our percentage? It's less than 1%. So it's a total greenfield for us to grow\" — CEO Hsing April 2017; \"Yes, it is fair that the growth rate it will not change much. Okay, but don't quote me exactly what's the rate. It would be very similar to this year. Which applications or which segments, I think in the next couple of years we're going to expand lot more segments. Now the lighting, infotainments and the safeties, and we will have a lot more safety products come out. And as Bernie said in his script, we have an ADAS and also the battery management as well as the connectivities. And those areas have a very little revenue or some of the items have no revenue, only sampling. And we expect to have a very high percentage growth in -- a very dollar amount growth in 2019, '20 and '21\" — CEO Hsing Commenting on Auto Feb 2018; \"The other thing I want to also point out is we're growing so fast, okay? 55% year-on-year growth last year. Take a look at the total semiconductor market in auto. It's about 13%, right? 4x growth versus the market. And you can see the TAM that we're going after, $7 billion. ...Really, we're at this moment where the opportunity is incredible. MPS happens to be at the right place at the right time. We've learned from the last 5 years of innovation of selling. We understand the customers. We have the great products. We see the growth really continuing over the next 5, 6 years, easily, 40% to 50% CAGR\" — Allan Chan MPWR Auto Marketing June 2018", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-ee38-728b-98cd-2e1354f8b3e0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.9, "x": 0.05, "y": 0.96 }, "kind": "source-note", "text": "1) On Semiconductor just noted at the 2019 Deutsche Bank Tech conference weakness in China, and notably autos and industrial – Sept 2019", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "78867c45-23c0-4944-b0a8-2f3172ee5da9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.81 }, "kind": "table", "text": "Automotive Revenues and YoY Growth table from FY 2015 to Q2 2019", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a4cb992f-eeb5-48e2-ada9-093c8c179fae", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.45, "x": 0.28, "y": 0.04 }, "kind": "title", "text": "Fizzling Auto Ambitions", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "14610eef-180c-4fb7-9351-4a69fd01e68a", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "4a3a36fe-9a80-49d0-9876-a74ebbcc7dff", "evidence": "Contrasts management quotes with actual performance data", "confidence": 1 } ], "arcBeats": [ { "to": 95, "from": 41, "beatId": "7f502b1a-d13a-4cdb-a619-66898178d5f2", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Solution (Provide relief)", "beatSlug": "problem-agitate-solution-solution-provide-relief", "evidence": "The document finally presents a solution, estimating 75-85% downside risk and providing a detailed valuation analysis.", "position": 2, "confidence": 0.8, "parentBeatName": "Resolution", "parentBeatSlug": "resolution" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }