Cruising with a breeze...

Original write-up Feb 9th 2025 - Bridge Solutions Hub

Price: PLN 12.8

Fully diluted Shares Outstanding: 1,596,529

Market Cap: PLN 20 million (USD 5 million)

Net cash: PLN 0.3 million

Summary

BSH is fast growing Polish company focused on the production and distribution of consumer products related to car maintenance and cleaning, but mainly AC replenishment. The company trades at a PE of 5.5 and is growing at 200%+ with a ROE of 90%.

What does the company do?

1. Production & distribution of car maintenance and cleaning products. BSH sells mainly car AC replenishment products, but also car paint protection spray or defrosting spray for cars, through e-commerce and traditional retail.
(> 85% of sales)

2. E-commerce sales and distribution of beauty care products

3. The Wpadaj platform and app, made for booking and reviewing small businesses like beauty salons and hairdressers

4. Marketing services (Search engine optimization, billboards, …) = unprofitable legacy business

Chairman Sławomir Lutek

Sławomir Lutek was and still is the chairman of BSH and of another company called 4Mass. If he wants to create a new company, I’m in, just looking at the revenue trends of both 4Mass and BSH:

What creates their success?

BSH was originally founded as Bridge Media, and at that time focused on marketing campaigns and advertising (billboards for companies like IKEA and Carrefour).

The offline advertising evolved into online advertising, as the company started helping customers with online campaigns, website building, and search engine optimization, hired developers and started seeing itself more as a software company.

The company then built the “wpadaj” application, which is a CRM app for small businesses like beauty salons and hairdressers. This application is still growing, but both the historic investment as well as the ongoing revenue is less than 1m PLN and the company has expressed that this is no longer their core business.

Through doing all this, BSH became experts in driving online marketing and sales, and at the same time, chairman Sławomir Lutek was learning about logistics and order fulfillment at 4Mass, as the company was rapidly growing in e-commerce (and wholesale into the Polish and European market).

Now the pieces are set up on the board, and then, the key moment happens for BSH, on March 9^th, 2023, they post a regulated filing:

What they did here is kind of funny. They bought some non-producing “asset” from a third party and they share that they will run this next to the existing business.

What they bought here was a production asset to produce Climaset, as well as the Climaset brand name, which at this point was unknown and not selling any products.

Using the e-commerce, fulfillment and retail experience of the company and the board, they then launched Climaset and AC Doctor, 2 brands of AC replenishment products:

This product is used by consumers or by car maintenance shops to replenish the R134a or R134ry cooling product used in the cars cooling system. Inside the cooling compressor of a car, part of this product slowly leaks out at a rate of 5-10% per year, which is why it needs to be replenished every 2-5 years. Older models use R134a, and newer models use R1234yf and both chemicals are provided by BSH.

This obviously mostly sells in the spring and in the summer, when people start worrying about their AC… BSH was a bit late in the game buying the asset in March 2023 but could use it to drive 74% growth within Q2 2023 and 220% in Q3 2023 as things were ramping up.

In 2024, BSH grew well on top of that, delivering 3x in sales so far for the year.

BSH has started building the “Chemical Tiger” brand around this product, offering all kinds of different car maintenance and car detailing products. Car detailing is like make-up for the car in the same way that car tuning is like plastic surgery for the car.

The acquisition of the Climaset brand and asset was a watershed moment, connecting a low value asset to a group of people with great knowledge and a good network to drive sales both online and through retail.

The company acknowledges this shift in focus and strategy on their website:

Finally in Q4 2024, the company has acquired 2 additional brands:

1. “AC Fix” which is another Polish brand of R134a and R1234yf

2. Bionic, a brand of footcare products like scrubs and oils

The company is also in talks to buy a company called “look4dog” which offers a platform that connects breeders and future dog owners, and more importantly also sells dog food products on a small scale in Poland. https://allegro.pl/uzytkownik/look4dog?srsltid=AfmBOoqloyGdpZoZbP1nY_Hwt3whUeczueEDCgV5GeYtDajrRfCFkPnL

While the AC Fix acquisition has small but obvious competitive and operational advantages, the Bionic acquisition and the potential look4dog acquisition are interesting potential add-on growth drivers for the company again bringing a product to the European market using the tried and tested skilled of the chairman and the company.

Competition in car AC replenishment products

The products of BSH in the AC replenishment category are commoditized products, with a couple of producers in each region.

The main North American brands or producers are AC Pro, Easyklima, Envirosafe and EZ-Fix. Easyklima also has European distribution and sales websites.

The main European brands are EasyKlima, Climaset, Cool5, and Alaska Refrigerants. There are also a few others like FixClima which are only active in 1 specific country and where it’s not always clear if they are a stand-alone company or if they are made by 1 of the companies above, as a private label brand for a local retailer.

The clear advantage Climaset has coming into the European market is:

- Best online presence (Amazon, other online retailers)

- Less expensive than US produced variants (e.g. EasyKlima)

This explains the large growth in the past 2 years, of which we likely see some more in 2025, although of course with declining growth rates as the market saturates. Based on online commerce statistics, Climaset is still less catching up with Easyklima in Europe.

Valuation

BSH has no options or warrants and has a 20m PLN market cap, or a 5.5x its TTM profit of 3.6 mPLN. The company has no debt.

Insider selling

On Jan 10^th, Mrs. Violeta Marzena Sowa-Łaszkiewicz, one of the co-founders of the company, who does not currently have a role inside the company sold 1% of the companies shares in the public market, reducing her ownership from 20% to 19%.

Investors should be cautious when insiders are selling, as it can sometimes signal potential issues. However, after careful consideration, I have assessed that for me, in this case, I consider the risk of negative news associated with these sales to be low.

She no longer has an active role at the company, and although her ownership represents 20%, it’s only 1mUSD and it’s the only investment she has. Also, while most investors have a long term time horizon, the shares of BSH did quite poorly in Q1 2023 as the company was not profitable in Q4 and Q1, so impatient investors sold off the shares leading to a ~50% decline in share price in 2023 and in 2024 in the beginning of the year.

This week, there was more large selling, likely again from Mrs. Sowa-Łaszkiewicz who likely has now sold 3-4% of the company for a total of ~100-150 kUSD. Investors interested in buying BSH shares based on their own research into the company, I think can best be patient for such liquidity events rather than bidding up the price.

Mrs. Sowa-Łaszkiewicz is the wife of Mr. Arkadiusz Łaszkiewicz, who runs the Arkadiusz Łaszkiewicz Family Foundation which is the largest shareholder of 4Mass. He or they also invest in several other interesting ventures, like Myegg for example.

Summary

I’m long BSH because the company delivers impressive revenue growth at single digit multiples and likely has more growth ahead of it in car products as well as in other consumer products that need better access to e-commerce and wholesale channels.

I initially bought BSH when it was only available through the Polish broker XTB and have increased my position significantly in November 2024.

Disclosure: We still own BSH

Disclaimer

This publication’s authors are not licensed investment professionals. Nothing produced by the Floebertus team should be construed as investment advice. Do your own research.