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  "documentTitle": "Lasertec Corporation (6920)",
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  "authorName": "Scorpion Capital",
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  "presentationDate": "2024-06-05 00:00:00",
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  "notes": "The slide uses a 'fraud-exposure' framework to argue that inventory levels are artificially inflated compared to industry peers.",
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      "kind": "callout",
      "text": "First two methodologies – normalizing inventory to peer group % of sales; and to % of assets; other methods shown in next chapter",
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      "text": "Lasertec is a relatively simple accounting fraud - one can easily estimate what its normalized inventory should be, and therefore the level by which both inventory and earnings are inflated and the size of the inevitable impairment charge and retained earnings hit.",
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      "text": "implied impairment charge: 66%",
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      "text": "one can easily estimate what its normalized inventory should be, and therefore the level by which both inventory and earnings are inflated and the size of the inevitable impairment charge and retained earnings hit - we explain the accounting math and interrelationships in the next chapter. Normalized inventory may be calculated by using 5 methods: 1) the 3-year average of inventory as a percent of sales across ASML, Applied Materials, Lam, Tokyo Electron, and KLA – 26% on average with little dispersion, and hence a robust measure, given similar product and business characteristics; 2) 3-year average of inventory as a percent of assets across the same peer group; 3) Lasertec’s historical, “normal” inventory as a percent of sales, from 2010 to 2017, immediately prior to its EUV product launch and before it spiked to unusual levels; 4) as a “normal” percent of its assets with the same methodology; and 5) by marking down its inventory by the 50-75% discount it is quietly offering to customers, per our research interviews, thereby adjusting it to “market value.”",
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      "text": "Source: Scorpion Capital analysis and estimates; Capital IQ data; Lasertec financial filings and IR materials",
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      "text": "Method 1: Normalize inventory to peer group % of sales vs Method 2: Normalize inventory to peer group % of assets",
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      "text": "Lasertec is a relatively simple accounting fraud",
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