Narrow-Moat Intertek Tested in Q3

Under normal circumstances organic revenue growth of 5.6% for the period July to October would be considered a win. Unfortunately for narrow-moat Intertek, its peers SGS and Bureau Veritas have in the last month also reported numbers closer to 7% and 9% respectively, casting Intertek’s update in a negative light. Ultimately, we believe the differential here is down to idiosyncrasies of the companies, in particular Intertek’s higher exposure to the production of consumer goods in China, which was heavily disrupted in the first half of the year. However, it makes little difference to investors, who recently soured somewhat on Intertek. With the share price languishing, we see this as a rare opportunity to acquire one of the three big diversified testing players at a material discount to our GBX 4,900 fair value estimate.