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  "documentTitle": "Lasertec Corporation (6920)",
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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 valuation is being manipulated to avoid impairment charges.",
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      "text": "Color from key Lasertec customers corroborates that the EUV inventory is worthless and therefore mis-valued, with the company quietly offering discounts of up to ~75% on its flagship ACTIS EUV tools, as well as other inducements and concessions. The customers indicated that Lasertec is playing inventory valuation games: “I can tell you right off the bat...they haven’t taken any impairments against their balance sheet, so they’re probably over-valuing their inventory far greater than it’s actually worth...”",
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      "text": "The amount by which Lasertec is fraudulently valuing inventory – and therefore earnings, as well as the magnitude of the impairment charge it is trying to avoid – is straightforward to deduce. We use 5 simple methods, all of which arrive at a similar figure: an inevitable 65-70% write-down of its $1.1B / ¥162B of inventory as of Mar ’24 – a ~$700-750MM / ¥105-113B loss that would wipe out ~70% of its cumulative earnings since the launch of its ACTIS product in late 2019 through the most recent quarter. The loss and retained earnings hit we think is imminent far exceeds what Olympus incurred in 2012 in the immediate aftermath of its scandal (¥49B/$300MM and ¥53B/$460MM, respectively); and is considerable relative to Toshiba’s loss and retained earnings hit of ¥400B/$2.6B and ¥378B/$2.4B in 2014/2016 – a sobering fact given Lasertec is only 3.5% of Toshiba’s revenue of ¥6,300B/$40B at the time",
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      "text": "Lasertec's accounting scheme is rapidly approaching the final stage, which is usually preceded by unusual tremors – ignored or misunderstood by most – as pressure builds before the inevitable earthquake. A major tremor occurred in the quarter ended Sep 30, 2023, when Lasertec’s gross margin mysteriously plunged from 56% to 36%, magically recovering to 56% the next quarter. The company’s explanations were evasive. Unexpected, dramatic anomalies in the financial reports are a tell-tale sign that a company is struggling to hold a scheme together.",
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      "text": "The gross margin collapse, for reasons we detail, is due to the fact that Lasertec’s EUV system is defective and unreliable to the point that Lasertec has no functioning EUV technology; and that key customers like TSMC and Intel are exasperated, angry, and refusing or delaying shipment and/or acceptance of Lasertec’s tools. Lasertec never explained what was different about the EUV tools sold that quarter such that they had no margin – the obvious implication, however, is that if those systems are worthless, then so is the $1.2B of inventory on its balance sheet, which is therefore mis-valued to avoid an impairment charge.",
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      "text": "gross margin: 65",
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