Support services (360) | TIC: de-rated, not disrupted

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Support services (360) | TIC: de-rated, not disrupted

s during 2026-28E,

while margins, FCF yield, and ROIC remain above or close to historical

benchmarks. The recent underperformance has been driven primarily by

valuation compression rather than earnings deterioration.

▪ Global trade disruption, deregulation, and AI are credible concerns, but we do

not view them as thesis-breaking. Company results and management

commentary indicate resilient demand. TIC demand is driven by regulation and

companies’ need to reassure clients, regulators, shareholders, and broader

stakeholders. AI may pressure certain standardised and data-heavy services, but it

should unlock productivity gains in a labour-intensive sector where salaries

account for c. 45-52% of sales.

▪ Company guidance and our forecasts are broadly aligned. We estimate 2026E

organic growth of 4.8% for Bureau Veritas, 5.0% for Eurofins, 4.3% for Intertek,

and 5.3% for SGS. On average, our estimates remain slightly more conservative

than consensus, reducing the downside risk to our target prices should market

expectations prove overly optimistic.

Valuation model

▪ We value the sector primarily using mid-cycle multiple ranges and a peer

group comparison as our core framework. The sector trades below historical

levels despite stronger underlying economics. Valuation multiples are compressed

across the sector even though organic growth, margins, FCF yield, and ROIC

remain strong.

▪ Bureau Veritas trades at what we view as an excessive discount despite

fundamentals that are broadly comparable with peers. SGS deserves a premium

given its platform breadth and ATS-driven earnings visibility. Intertek’s higher-

margin profile is attractive, but its valuation already reflects part of the optionality