On August 5, 2018, prescience Point Capital Management released to be aimed at Enphase Energy (NASDAQ: ENPH) of the company make empty report. The report says Enphase Energy company uses impertinent accountant mode of operation to bring about outstanding achievement to be exaggerated badly, and in next the expression of the company inside the quarter will continue to worsen.
Suffer this effect of adverse element, the share price of Enphase Energy company appears that day " bluff type " drop.
Prescience says to think in the analysis that signing up for to Enphase Energy money, although the company was used radical and impertinent accounting method will raise outstanding achievement, but its are behaved finally still under expect a level, undertook reducing to the anticipation of next quarter. Nevertheless, actual condition still is met probably more flooey.
One, operate give delay income
The enterprise can delay income to think income will increase income and profit truly through will be being given quickly, this is one of the commonnest accountant operation gimmick.
the four seasons was spent 2017, enphase Energy announces its the product gives the amortize that delays income period decrease from 10 years to 6.5 years. This change makes the business income of the fourth quarter of company direct raised 2.6 million dollar.
Be in likewise 2018 mix first quarter the 2nd quarter, of the company give delay income amount to appear again unusual change, amount dropped respectively 7.5 million with 5.6 million dollar. Can see from next graphs, 2018Q1, Q2 gives the fluctuant specified number that extends income and past 5 years the expression of each quarters differs tremendous.
The change of the amount that evidence shows this one share and be identical of photograph of company income increment, prescience suspects the company applied similar finance affairs to handle technique, will give the goal that delays income to think the income of these two quarters achieved enlarge outstanding achievement thereby truly ahead of schedule.
2, income is added fast unusual
Data statistic, the product that 2017Q1 reachs 2018Q1 company -- inverter (Inverter) sale from 573 thousand add to 611 thousand, rose compared to the same period 6.6% ; At the same time the gross income of this one period comes from 54.8 million growth 70 million, rose 27.8% , the income amplitude that means every inverter is 19.9% .
However, in light of the historical expression that combines company product, such adding fast appear very unreasonable: Because be before 2018Q1, the income of product of the unit inside weak quarter all is downtrend, fall in 5%-10% inside this limits. Below the case that handles without the accountant, every circumfluent implement the possibility that produces income suddenly to increase considerably is very little.
The expressional confirm of the 2nd quarter this guesses: 2018Q2, annulus of every inverter sales revenue is compared dropped 3.3% , fall basic the expressional appearance be identical with the history, explain the company is extremely possible again make a false report net.
3, administrative layer gives an irrelevant answer, antilogy
To going of two quarters income unusual increase, the administrative layer of the company offerred 3 kinds of different explanations, look in Prescience, explain be fair and reasonable without a kind.
1, in conference of telephone of 2018Q1 money newspaper, the every inverter sales revenue growth of Bert Garcia of presiding and financial officer before the company the growth that give to the public sells at be not inverter product, it is after that in the telephone conference May, rise quickly what he makes it clear that because cable and fittings are sold,saying this one growth is further be caused by.
Prescience thinks the sale amount of cable and fittings needs to achieve of 303% compared to the same period amplitude just brings about every inverter sales revenue to appear likely of 20% compared to the same period amplitude, although all product sale add in,calculate, achieve so tall amplitude impossibly also.
2, in conference of telephone of 2018Q2 money newspaper, kothandaraman is attributed to the income growth of every inverter of this quarter the past " 4 go to 5 " the contribution of long end client of the quarter. He claims, the product unit price that long end client purchases and large client purchase valence photograph than raising 10%-15% .
Prescience thinks the place when the explanation of Kothandaraman and Q1 conference says " the price is invariant " not agree with; Even if is accorded with, also meant long end client to buy the inverter of the company with not real tall excessive value, it is unreasonable apparently.
3, in the 25th page in newspaper of money of 2018 the 2nd quarter, the company gave out the 3rd kind of explanation: income the sale that growing considerably is attributed to product of series of new generation IQ grows.
And in fact, the actual price of the IQ series of the company is compared however on the price of generation product wants low, be impossible to bring so high income.
Will look on put together, when a few unusual display that company management layer tries to explain financial result is medium in telephone conference and difference problem, its explain the allegation before mixing conflicts each other, devoid reliability.
4, client impeach
2018Q2, the company says to achieve trait 2 million yuan come from a client the payment of custom-built business, but according to investigation, prescience suspects this pays is Enphase Energy uses empty to add outstanding achievement another in expression.
From inside the telephone conference content of Q2 understanding arrives, this trading wool interest rate is 100% , it is 0 cost in other words, very doubtful. In the meantime, in hereon of division of face bisect analyse second when the query of trading client information, administrative layer states inconvenience discloses, not again at this point the problem of the respect makes any replies.
5, disappear the receivable Zhang money that disappear
Enphase Energy says in 2018Q1, affirm rule according to income of ASC 606 US, of the company give delay income to be 116.8 million dollar. However, prescience analysis calculates those who say its are actual to give delay income to be 123.1 million dollar, differred 6.3 million dollar.
In be asked about of this 6.3 million dollar give when delaying income whereaboutldirection, company management layer says is the adjustment as a result of receivable bill be caused by. But in the money newspaper that is in a company, did not discover the data related to this.
Prescience sought advice from accountant of Wu of one domestic discipline exercised by the head of a feudal household is an office, the explanation that gives the margin of 6.3 million dollar that delays income in order to evaluate administrative layer to its is significant. Final, the answer of this office is right this adjusts means to express to suspect.
6, hold the post of CEO - Ahmad Chatila newly
Investor discloses, before the Ahmad Chatila of CEO – of SunEdison assumes office in Enphase Energy at present, and he is famous before this because of the biggest 2016 business failure event.
Pass the contrast of Enphase and SunEdison, the accounting method that discovers two companies place is adopted and operation pattern are very similar, prescience thinks to want to keep vigilant to such signal.
7, the business that worsens quickly
2014 to 2017, the income of the company from 340 million drop to 280 million dollar, fall 17.5% , mean a company to be in the adversary SolarEdge Technologies that had let have competitive advantage more inside a few years in the past (NASDAQ: SEDG) .
As other capital abundant competitor enters this market, the business of Enphase Energy may continue to worsen, and the outstanding achievement that the 2nd quarter glided 2018 had confirmed this.
The income after 2018Q2 company is adjusted is 68.3 million dollar, with the photograph of 74.7 million dollar of the corresponding period was compared last year dropped 8.6% , meanwhile, the sales volume of the product from 775 thousand drop to 675 thousand, glide 12.9% . The anticipation that subsequently the company reduced 2018Q3 income, for 74 million - 80 million between, anticipate under the market about 8.5% .
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