5th Jan 2023 14:37
(Alliance News) - For Shore Capitalist research analyst Robin Speakman, Intertek Group PLC has robust finances, albeit with an exposure to China that poses a "significant" with concern in regard to further trading restrictions and geopolitical tensions impacting its financial 2023.
For the London-based quality assurance service provider, Shore Capital assumes organic revenue growth in Products with a margin of 22% over 2022.
Shore's Speakman said: "In our view, Intertek has to generate higher group organic growth than the historic low to mid-single digit level... and deliver the higher group earnings before interest and tax margins promised by the management narrative, to justify the current share price and a higher
valuation target price."
Shore expects Intertek to increase its sales by 14% to GBP3.18 billion in 2022 from GBP2.79 billion in 2021. Until at least 2025, the analysts expects steady growth every year, with GBP3.58 billion in 2025.
For Intertek's annual pretax profit, Shore anticipates this to climb 8.2% to GBP447 million in 2022 from GBP413 million and then to increase every year to GBP483 million, GBP496 million and GBP513 million in 2023, 2024 and 2025 respectively.
For earnings before interest, tax, depreciation and amortisation, Shore expects steady annual growth, rising 8.9% to GBP721 million in 2022 from GBP662 million in 2021, growing to GBP766 million, GBP796 million and GBP831 million in 2023, 2024 and 2025.
In November, Intertek lauded a rebound, citing China. In the 10 months to October 31, revenue grew 16% to GBP2.63 billion from GBP2.28 billion a year prior. All sectors grew, with trade revenue climbing by 6.3% and Resources and Products growing by 9.3% and 9.8% respectively.
"We have an excellent business in China with leading and scale positions. The lockdown restrictions had a significant impact in our China business between March and June, with Shanghai the most impacted. It has been operating as normal from July onwards and as expected, our business has rebounded quickly delivering a good like-for-like revenue growth at constant currency in the July to October period," Chief Executive Officer Andre Lacroix explained in November.
Intertek shares were 0.5% lower at 4,185.00 pence each on Thursday afternoon in London.
The firm intends to release its full-year results on February 28.
By Tom Budszus, Alliance News reporter
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