Phase 2: Hortico1.If inflation was 10%, will this company lose customers if they raised prices?Yes2.$1B + 3 years + brilliant scientists – would that mean customers would switch? No - customers care about prices.3.Saves a dollar, but costs cents? No - it's a low-margin business.4. Any idiot can't run a complex operation with suppliers etc, if he doesn't have smart advisors.5. Even if tech evolves, companies need to buy supplies - but what if Amazon forces them out?If you become a Founding Member of the NabzdykRatings Software today (€9/mo), I will manually grant you Premium Access to this Substack for free (until you cancel the free trial).Become a founding memberPhase 3: WargameAsset heavy - prices can be lowered up to a certain point - what if Amazon builds a similar platform to LoginTrade SA, but for agriculture only? Massive specialized warehouses aren't needed - Amazon warehouses has them, and drive prices down.On the other hand, professional clients might already use their e-store - but aren't they susceptible to commodity price drops?Here I made a mistake – Hortico isn’t an asset-heavy company. They are part of teh CONSUMER BRANDS archetype, which emna,s I shodul be looking at:Same-Store Sales Growth (SSS) / Inventory Turnover.and ignore new store openings (they said in teh letter that tehy opened two new “Mrówka” stores - that is noise. Why?Any idiot can open 100 new stores to boost revenue. It doesn't mean the brand is healthy.An AI asks why Castorama can't just skip Hortico.My answer: it might not be worth the hassle, because it doesn't account for a large portion of sales.The friction definitely isn't in warehouse management; maybe it's something related to negotiation of pricing? OR manufacturers don't like them and trust a Polish-owned company more?Without Hortico, a large retailer would need to call 400 manufacturers and haggle over prices with each one – organise logistics separately – it would be a mess. With Hortico, you have probably one order, one phone call, and possibly one truckload of supplies.If Amazon Business commoditises seeds and other products Hortico sells, the result would be bad: Hortico’s distribution margins would go down to zero.A shareholder letter from 2025 excerpts:https://hortico.pl/wp-content/uploads/2026/05/20260529-GK-HORTICO-Skonsolidowane-sprawozdanie-finansowe.pdf Page 1:W roku 2025 świetne wyniki osiągnęła spółka PNOS. Co istotne, wyniki te udało się uzyskać pomimo borykania się z problemem szeregu reklamacji na produkty nasienne czeskiej firmy, której PNOS był dystrybutorem. Działania PNOS w zakresie reklamacji nakierowane były na wyjaśnienie problemu oraz wsparcie klientów. Ostatecznie PNOS odstąpił od umowy dystrybucyjnej i w roku 2026 złożył pozew przeciwko dostawcy. Konstrukcja pozwu, w wypadku wygranej, zakłada przekazanie uzyskanych środków klientom. PNOS pozostaje liderem naszej Grupy w zakresie zyskowności. Liczymy na dalszy wzrost pozycji rynkowejPNOS przy jednoczesnym zachowaniu wypłaty dywidendy dla HORTICO.Translation:In 2025, PNOS achieved excellent results. Notably, these results were attained despite the company grappling with numerous complaints regarding seed products from a Czech supplier for which PNOS acted as a distributor. PNOS’s response to these complaints focused on resolving the issue and supporting customers. Ultimately, PNOS terminated the distribution agreement and filed a lawsuit against the supplier in 2026. The lawsuit is structured so that, in the event of a victory, the proceeds will be passed on to the customers. PNOS remains the most profitable company in our Group. We anticipate further growth in PNOS’s market position while maintaining dividend payments to HORTICO.verdict:A mistake was mentioned by the CEO (alignment is high), and the lawsuit's result is uncertain right now.But in the shareholder letter, I missed a crucial revelation which was pointed out by an AI later on - I had to implement a new rule to remember to always sum up the margins when the ceo says something about segments or subsidiaries:Osiągnięte w 2025 r. wyniki uznajemy za bardzo dobre – na poziomie Grupy Kapitałowej osiągnęliśmy: 20,97 mln zł zysku ze sprzedaży, 21,84 mln zł EBITDA, 19,11 mln zł zysku operacyjnego i 15,38 mln zł zysku netto. Na poziomie jednostkowym HORTICO osiągnęło 153,7 mln zł przychodów ze sprzedaży i 3,83 mln zł zysku netto, PNOS osiągnął 47,4 mln zł przychodów ze sprzedaży i 10,35 mln zł zysku netto, zaś OGROFOL 9,1 mln zł przychodów ze sprzedaży i 0,38 mln zł zysku netto.Hortico (Parent) Revenue: 153.7 mln zł | Net Profit: 3.83 mln zł | 2.49%PNOS (Subsidiary) Revenue: 47.4 mln zł | Net Profit: 10.35 mln zł | 21.83%See the high net margins for PNOS (the seed grower company)? It’s very high!15,38 mln zł = total net profit.10.35 mln zł is from PNOS. 67% of the group’s net profit is generated by 23% of their revenue - that is a trojan horse.The company seems promising - but is it? For that, I will use Phase 4—the test of its expected return with no DCF needed.If you become a Founding Member of the NabzdykRatings Software today (€9/mo), I will manually grant you Premium Access to this Substack for free (until you cancel the free trial).Become a founding member