First Read Intertek Group plc: Strong profit beat, in potentially last results

研报英文原文证据摘录

First Read Intertek Group plc: Strong profit beat, in potentially last results

Forecast returns

Forecast price appreciation 7.8%

Forecast dividend yield 3.9%

Forecast stock return 11.7%

Market return assumption 9.1%

Forecast excess return 2.7%

Company Description

Intertek is a leading international testing, inspection and certification organisation, which

assesses customers' products, commodities and systems against a range of safety, regulatory,

quality and performance standards via a global network of laboratories and offices. The

group operates in five main divisions: Consumer Products (c30% of 2024 sales, c50% of

profits), Corporate Assurance (c15% of sales, c20% of profits), Health and Safety(c10% of

sales), Industry and Infrastructure (c25% of sales) and World of Energy (c20% of sales).

Valuation Method and Risk Statement

Our price target is based on a DCF methodology, using WACC 8.5% and terminal growth

+2.0% (in-line with other defensive structural growth names in the sector). Testing,

Inspection, and Certification companies are complex and decentralised businesses operating

across many different markets. Driving a coherent strategy and operating efficiency is a

significant operational challenge, especially while integrating acquisitions. (Loss of) key

personnel risk can be significant in the business, and we would extend this to divisional

management given the operating structure. All TIC businesses are exposed to legal or

reputational risks from an erroneous inspection or test. A prolonged downturn in specific end

markets can weigh considerably on firms to different extents (e.g. the oil & gas industry;

minerals; Asian Consumer testing). Exposure to emerging markets is high at c40% of