MBRFF - Mo-BRUK S.A.

[Arski]

Found the case of Jeremy Raper very interesting: 

Mo-BRUK (MBRFF): Polish ESG Champion With Long Secular Growth Runway At Value Multiple | Seeking Alpha

Only concern is with the Polish government I think. Which is very unpredictable and could have a huge, negative effect. Competitors aren't that big of a concern, at least not within 3-4 years (more information about it in the above write-up of Jeremy).

 

Does someone else see risks that are overlooked?

[EricSchleien]

Jeremy is spot on. I've owned this name for a bit. 

[Ilyich]

Hi, my first post here  Thanks to @shamelesscloner for pointing me in this direction through his YT channel.

I loved the writeup and the detailed deep dives into all the aspects of the business model. Regarding risks, we had a short discussion on twitter ( https://twitter.com/OCY61844218/status/1375824805883211776 ) with another user who pointed out that countries with larger removal/processing capacity will likely have to lend a helping hand(i.e. Germany). As he points out, and I haven't been able to verify this on German ministry websites, Germany has a removal/processing capacity of 1Mton/yr. If they throw their entire capacity then Poland's cleanup would take 4.5yrs given the 4.5Mtons of the illegal garbage estimates. MAke it 3.5-4yrs with Poland's own capacity. This could and should happen for the good of the people and the environment but it can't can't happen with Germany's full capacity for the following reasons. 

1. Germany can't throw their entire capacity to Poland since that would mean to stop processing their own garbage.

2. Other Eastern EU countries bordering Germany are in a similar situation as Poland, Germany would need to help them too.

3. As Jeremy points out in his response on twitter, garbage regulations are country specific and it will take time for the bureaucracy to turn its wheels for help to arrive.

4. Distances also matter in garbage transportation. I think most of it is done by trucks, but could be done by rail too.

This does not preclude Germany throwing some capacity to help out. I don't know how much that could be, perhaps 25% because I think more than that is unreasonable. If its 25%, then the timeline of completing the removal/processing quadruples. Also keep in mind that the business won't be sitting still during that time.

Other than this, more risks are highlighted in the prospectus Jeremy posted on twitter.

Some more work to do - I would like to investigate the locations of Germany's processing plants. I think only plants close to Poland's southern border would be able to take on some of the capacity. Wonder how many there are and their processing capacity.

All the best

 

P.S. My first edit deleted part of my post which I had to rewrite (in case you get a notification with the old text).

Edited April 2, 2021 by Ilyich
added twitter link, rewrote a part that got accidentally deleted, updated shamelesscloner's name

[Sunrider]

Firstly, I'm not sure how you 'throw capacity', but that aside, the more pertinent question might be what (a) the economics of shipping waste to Germany and disposing it there look like vs. holding it in Poland and dealing with it over time, and (b) what the politics of the matter are, as I would expect lobbying to go both ways (clean it up quickly, no matter the cost and whether with German capacity or not vs. 'we should not be sending money to Germany and can do this with Polish companies').

That might be a better way to come to a reasoned estimate of the competitive threat German capacity may pose for the thesis?

[Ilyich]

On 4/3/2021 at 8:29 AM, Sunrider said:

Firstly, I'm not sure how you 'throw capacity', but that aside, the more pertinent question might be what (a) the economics of shipping waste to Germany and disposing it there look like vs. holding it in Poland and dealing with it over time, and (b) what the politics of the matter are, as I would expect lobbying to go both ways (clean it up quickly, no matter the cost and whether with German capacity or not vs. 'we should not be sending money to Germany and can do this with Polish companies').

That might be a better way to come to a reasoned estimate of the competitive threat German capacity may pose for the thesis?

Sorry, "throwing capacity" was a poor choice of words. What I meant by that was to use the waste removal/disposal equipment and infrastructure that operates within Germany to help Poland clean up the illegal dumps. That just describes the idea and I don't have anything to describe the economics/politics or the legal framework of it.

After a quick google search, it turns out the situation is the exact opposite... Poland is a net importer of EU+UK waste, a lot of it through illegal channels by(intentional and illegal) improper labelling of recycling waste. Polish gov't is trying to crack down on the illegal part of it but they are not closing the import gates.

https://www.dw.com/en/polands-growing-problem-with-illegal-european-waste/a-55957224

https://www.dw.com/en/poland-wont-take-uk-garbage-any-more/a-49725035 - The title seems to be misleading. I was expecting to see a Polish law banning garbage imports from the UK but there is no such thing.

I need to re-read Jeremy's article again for it to stick better, most of these points are mentioned there already.

[Ilyich]

Mobruk is being accused of illegally dumping waste some time ago and now getting a PLN50mln contract to clean it up. We read the articles mentioned in the VIC comment and watched the YT video(see Twitter link). There wasn't anything that explicitly implicates the Co. They also have been investigated on this case already in the past and have been found clean.

The video from 2011 attached. Nothing explicitely about Mobruk or their subsidiary Raf-Ekologia (that's being accused of the dumping) in there. Unless those shipping labels point to some leads. Who knows..

 

 

Edited May 6, 2021 by Ilyich

[Jurgis]

Hey, it's Eastern Europe. If they can get away with dumping, they dump. If there are shortcuts to make money, they will. If they are "smart", they'll "work it out" with authorities.

It is funny if they are really getting a contract to clean up the stuff that they themselves dumped. I would not be surprised though.

Good luck.

Edited May 6, 2021 by Jurgis

[changegonnacome]

Indeed - and I dont quite see the authorities sitting back and letting Mobruk bend them over a wall as a monopoly solution to the countries environmental dumping/ waste problems…….Mobruk will need to ‘play ball’ so the extreme pricing power articulated in the write up might be there in a Western European democracy but this is not Kansas……Mobruk’s margins and ROC will attract attention and the Minister for X will put a call into them (or maybe a little dumping scandal like today would do the same trick & create political will to moderate Mobruk’s returns) and as covered in the write up Mobruk’s employees will want an excess return on their labor too.

I like the idea and can see ESG zombies bidding this up to the moon. Nice pair with my anti-ESG Altria trade.