Mo-Bruk (MBR.WA): Investment Thesis

Hi guys, sharing my analysis on this lesser known undervalued company and would like to know your thoughts on it: TL;DR: Mo-Bruk is a Poland-focused hazardous/industrial waste processor with unusually high margins (about 45% EBITDA in 2024) and strong shareholder returns (PLN 13.17/share dividend + authorised buyback). The stock has gone sideways for 3 years after an enormous 2015–2021 run, and 2025 optics got ugly due to a large one-off provision (PLN 65.2m). I think the market is anchoring on the headline “loss” rather than normal earnings power and improving free cash flow once capex drops. What it is Mo-Bruk (MBR.WA) is a Polish waste management company specialising in hazardous and industrial waste processing, RDF (refuse-derived fuel) and incineration (hazardous/medical). It operates multiple plants across Poland and positions itself as a “one-stop-shop” for difficult waste streams (stabilisation/solidification, RDF, incineration). They’re also expanding into adjacent niches (e.g., oily waste/contaminated water unit launched in Q4 2025). Why it’s interesting to me (the “ hated moat”) This is a regulatory-barrier business, and Poland/EU regulation is effectively the moat: 1. Permits/licensing are the gatekeepers. Hazardous waste processing requires integrated permits and heavy compliance. These are slow and difficult to obtain, which naturally caps new entrants. 2. Technical complexity & reputation. Neutralising hazardous waste, producing RDF, and running incineration safely requires specialised expertise and trust with regulators/clients. Track record (which Mo-Bruk has) matters in a way that’s hard to replicate quickly, which further strengthens the moat. 3. Location and network effects. Plants are positioned close to industrial regions in Poland, reducing transport costs for customers in this way. It’s not “software scale”, but having the infrastructure in the right places compounds advantage. 4. “Eco-bomb” remediation (illegal toxic dumps). Mo-Bruk often appears to be one of the few credible bidders for complex clean-up tenders with having the "eco-bombs" as a tailwind for the company's future. Key numbers: Market cap: $300m Share price late Dec 2025 when I invested: PLN 315 (recently moved to ~PLN 350) 2024 fundamentals: Revenue 2024: PLN 283.9m Net profit 2024: PLN 70.3m Margin profile (2024): ~45% EBITDA margin, ~25% net margin (for 2025 the EBITDA margin is expected to be around 50%) Rough P/E on 2024 earnings: ~15.6x As far as shareholder returns go, the company issues dividend and also has buybacks. Dividend is PLN 13.17/share (paid for 2024 and again approved from 2024 profit for payment in 2025). That’s currently about 3.8% yield. Buyback was authorised for up to 124k shares (~3.56% of the entire float) with PLN 50m budget, price range PLN 200-400 over 2025-2026 period. 2025 “optics vs reality” issue: 2025 included a large one-time provision (PLN 65.2m) tied to a legacy fee dispute (Wałbrzych landfill, 2018–2019). This drove ugly headline results (including a Q3 net loss). The loss was largely accounting/provision-driven, while underlying operations held up (adjusted profitability closer to prior year levels). Management also guided for full-year revenue above PLN 300m and adjusted EBITDA margin near ~50% (vs ~45% in 2024), supported by high-margin remediation work in Q4. Capital allocation and balance sheet: Net debt cited around PLN 84m, which is modest relative to earnings power in a “normal” year. If you approximate 2024 EBITDA at PLN 128m (45% of PLN 283.9m), then EV/EBITDA is roughly 9x (very back-of-the-envelope). FCF setup is the part I think the market may be underpricing. They’ve been investing meaningfully in 2023-2025 (capex suppressing FCF). The thesis hinge is that capex is expected to step down after major projects conclude, which should let free cash flow “reappear” and track earnings more closely. My base-case scenario and calculated intrinsic value say PLN 450 (c. 28.6% upside from today's price). Not heroic growth needed. Just “boring compounding” if volumes/price hold steady in core hazardous streams, they keep winning a reasonable amount of remediation work and capex normalises, allowing higher FCF. In that world, I can see the stock re-rating from “dead money ex-highflyer” to “steady cash compounder”, especially if reported earnings rebound post-provision. Risks Regulation cuts both ways, i.e. favourable rules created the economics, but sudden interpretations can also create large costs (2025 provision is the exhibit). Remediation (“eco-bomb”) work depends on state/EU funding and tender timing. Delays can move earnings around. Competition is always a risk and while it's still limited in hazardous waste, the RDF is more competitive and pricing could compress. I wrote two articles about Mo-Bruk (DCF analysis & deep dive analysis) in case anyone is interested in more research but not here to promote those. I'd really like to know if anyone else holds the stock (or thinking about it) or deliberately doesn't, and in that case I'd like to discuss why. :) Disclosure: I hold Mo-Bruk shares (MBR.WA) at average price PLN 313 (initiated Dec 23, 2025). This is not investment advice, just my research notes shared for discussion.