@PhilO Good question but to be fair, you could apply that to every single business. What's to stop a new competitor coming along and taking away anyone's business?

My answer to this is usually the moats that a business has - a good or a few good moats and you have a better than even chance. No moat and it's much more likely or at best you'll only be able to compete on price.

So, specific to PWH, I think their moats (or competitive advantages) are -

• High level of technical and industry knowledge (the Founder ran his own motorsport team).
• Vertical integration - they design and then manufacture it all in house and across three different geographies (expensive to set up from scratch).
• Strongest brand and reputation (who wants to go first using an unproven cooling option and risk the whole team operations). On this one, perhaps PWH got "lucky" in that the year Red Bull first tried them, they also won the championship although I am sure that wasn't just down to great cooling systems.
• Founder led with lots of skin in the game, so they care and have more to lose than a company that may mass produce things but doesn't have as much at stake.
• They have generated ROE, ROC and Net Profit Margin all in the 20% + range for over 10 years, which are all great signs of genuine moats and pricing power.

No doubt there are other things they are doing well too and none of this is an iron clad guarantee but it's enough for me not to lose sleep about a quick and total end to their business.

Bottom line - a new, aggressive, highly skilled competitor is a definite high consequence risk for PWH but at this point it's low likelihood for me.