CSTE – Otzar Rebuttal

  • Viceroy find Otzar Capital’s ties to one of Israel’s larger investment relations & public relations groups concerning, especially considering the potential connections between the IR/PR and Otzar’s reports. We have provided a portfolio of evidence in this regard to the SEC.
  • Viceroy have concerns that the Investors may have entered into such investments with what appears to be a lack of disclosure.
  • Otzar’s report completely glosses over significant arguments made in our first report, including the pending silicosis class action, disappearing dividends and stock buybacks and nonsensical market data.
  • Otzar had to go all the way to suburban Miami to meet a Lowe’s retailer that sold Caesarstone’s transform. Congratulations, you got us.
  • Otzar’s most convincing arguments: our misuse of Cosentino’s major subsidiary vs the consolidated group accounts (which we are still unable to verify but will give the benefit of the doubt) adds to our thesis. Competitor margins in the consolidated numbers presented by Otzar are even smaller than Viceroy’s previous figures, making Caesarstone’s margins even more outrageous and enforcing our belief that Caesarstone’s costs are understated.
  • Otzar’s management and supplier derived volume calculations imply that either resellers are operating on ~300% mark-ups or Caesarstone’s facilities are producing well below capacity, yet amazingly they look to be correct! If this is the case, why build more lines?

CSTE – Otzar Rebuttal PDF Download Link


Caesarstone (NASDAQ:CSTE) Nothing on the Counter.

  • CSTE’s major revenue growth product, marketed as a collaboration with Lowe’s, is not for sale according to Lowe’s Customer Services and store checks. This is contrary sell-side forecasts highlighting this as a growth driver.
  • Of CSTE’s listed sales agents, there is a growing percentage no longer sell (or have never sold) CSTE products, switching to higher margin products. Agents who sell CSTE are charging a higher retail price than consumers pay at IKEA for identical products. Ikea countertops include free installation!
  • We believe CSTE’s inventory should be revised materially downwards to reflect decreasing average selling prices within their larger customers.
  • SEC enquiries into CSTE revenue growth factors inconsistently addressed by management. The major revenue variance factor, increased average selling price, is not supported by channel checks which show prices decreasing at major customers/outlets.
  • Competitor analysis suggests CSTE are either not maintaining machinery adequately or that machinery is severely under utilised.
  • CSTE has consistently missed guidance; a theme we identify and is unlikely to change.
  • Shareholder friendly programmes discontinued. CSTE is now a negative earnings growth vehicle with no payout policy.

Caeserstone Report PDF Download

Quintis Limited (ASX:QIN) – formerly TFS Corporation Limited – Money Doesn’t Grow on Trees

The saying goes, money doesn’t grow on trees..

  • Bogus sales channels.
  • Directors skimming cash through round robin scheme, which concurrently allows Quintis to artificially boost sales.
  • Fictional institutional sales, Quintis books revenues which are
    intermittently used to gain access to debt finance, before being written off.
  • Debt finance used to engage in Ponzi-like behavior.
  • Viceroy’s price target for Quintis is $0. The scenario is reminiscent of historical MIS ventures such as Timbercorp and Great Southern, both of which are now defunct(consensus with Glaucus Research Group).

Quintis Limited Report Download


Syrah Resources (ASX:SYR) – Defying economic principles through marketing veil

Once upon a time in Mozambique, there was an overpriced junior graphite miner..

  • Balama mine will more than double current global graphite supply.
  • NPV assumptions are outdated, overly optimistic, and appear to include errors. 
  • Public record request for Louisiana spherical graphite plant plans yielded no results.
  • The management team is unstable.