Red Flag #5
So we are expected to believe that Ubiquiti generates nearly all its cash in Hong Kong and U.S. cash balances have not grown, despite the fact that most its expenses are offshore, it has been profitable every quarter since its IPO, and roughly one-third of its revenues are from the U.S. market. Where is the growth in U.S. cash?
Ubiquiti International is in Hong Kong. Here is what I believe to be true: One can have a business in Hong Kong that exports and there are no taxes on the profit from the exports. So if Ubiquiti manufactures in China, it could sell the product to the Hong Kong entity at very low margins, sell from Hong Kong to international companies at high margins (even back into China?). Sell to U.S. at higher price and the profits are in Hong Kong. And therefore, the cash is there.
The question would be, “How do you utilize the cash?”
KC
Could be. Another possible explanation. Cash in US is utilized for buybacks so US cash balances do not grow as compared to those outside US.