Hollysys Automation (Nasdaq:HOLI) is about to reveal earnings. Ponder this Bear Case Scenario
Hollysys does not trumpet any sales outside of China. Given china’s propensity to export and generate foreign exchange this may be a comment of their inability to compete globally. Their customers are all based in China. Corporate communication does not mention their ability to compete against established global giants with proven technology.
R&D spend is anemic when compared to the resources of global competitors. They have not come out with proprietary products which may suggest they spend time copying.
While debt is being paid down it is difficult to not notice that non current assets are rising dramatically and accounts receivable are also growing. will they be caught in a China liquidity storm.
China exposure may be viewed by some as a major negative.
George Gutowski writes from a caveat emptor perspective.