Intertek, renewable trusts & shares on a tear: The Companies and Markets Show
This episode of The Companies and Markets Show covers three main topics: Intertek (ITRK), a FTSE 100 testing and certification company facing board changes, a strategic review, and a rejected private equity bid from EQT; renewable energy investment trusts and their prospects amid rising energy prices following a US-Iran conflict; and ASA International (ASAI), a microfinance company whose share price has surged 130% over the past year.
Summary
The episode opens with a detailed discussion of Intertek (ITRK), a FTSE 100 testing, assurance, and certification business. Analyst Valeria Morganti outlines how the company, under long-serving CEO Andrzej Lacroix, has spent a decade shifting toward higher-margin, regulation-driven work. Recent weeks have been eventful: a strategic review was announced that could result in a demerger or sale of its energy and infrastructure division, which is considered more cyclical and lower-margin compared to the higher-margin corporate assurance arm. Just before recording, Swedish private equity group EQT disclosed it had made an acquisition approach that the board quickly rejected as too low, with EQT given until mid-May to return with a firm offer. Leadership changes are also underway, including a new chair and CFO reshuffle. A trading update showed like-for-like growth of 5.4% in early 2026, with the corporate assurance division growing in double digits, while the energy division came in flat — an improvement over prior quarters but still lagging. Concerns were raised about underinvestment, with Jefferies arguing the company has been playing catch-up on CapEx, and Citigroup noting weaker growth relative to peers. The shares trade at around 16 times forward earnings, a discount to peers SGS and Bureau Veritas, and questions remain over whether a breakup or improved growth can close this valuation gap.
The second segment focuses on renewable energy investment trusts, with analyst Holly McKechnie providing an overview of the five largest: Greencoat UK Wind (UKW), Greencoat Renewables (GRP), Renewables Infrastructure Group (TRIG), Bluefield Solar (BSIF), and Foresight Environmental (FGEN). These trusts have seen renewed interest following rising energy prices caused by the US-Iran conflict. However, McKechnie notes that the impact varies significantly because most trusts sell forward around 80% of their power generation, limiting their direct exposure to spot market prices. Greencoat UK Wind has the highest merchant price exposure at around 40%, while most others sit between 10% and 15%. The sector has faced a difficult period due to lower-than-forecast power prices, uncertainty over government subsidy calculations (resolved in February in favor of the trusts, though with lingering investor nervousness), and poor wind speeds. Despite some recent improvement, discounts to NAV remain wide across the sector. Structural tailwinds — including the energy transition, energy security concerns, and inflation linkage on subsidies — offer medium-to-long-term optimism, though bond yield sensitivity and asset disposal difficulties remain risks. The wind-down of SDCL Energy Efficiency Trust was cited as a cautionary example of ongoing sector challenges.
The final segment covers ASA International (ASAI), a microfinance company operating across West Africa, East Africa, and the Indian subcontinent. Analyst Julian Hoffman explains how the company provides small loans to populations with little or no access to traditional banking, operating through a large network of agents. Its share price has risen 130% over the past year. Full-year results to December showed loan book growth of 33%, though this was partially flattered by Forex tailwinds (particularly Ghana's currency appreciating against the US dollar) and a decline in the effective tax rate from 55% to 45%, contributing around $10 million that may not repeat. Credit quality remains strong, with delinquent loans below 2%. The company is investing in a digital, app-based infrastructure rollout, leveraging high mobile phone penetration in Africa. It is withdrawing from India, attributed to market maturation rather than operational failure. The stock trades at just 4.4 times earnings — roughly half the valuation of comparable banks — and offers a 4.7% dividend yield, with the next results set to be a key test of whether underlying growth momentum is sustained.
Key Insights
- Valeria Morganti argues that Intertek's board likely rejected EQT's approach partly because incoming new management believes there is more untapped value in the business, though analysts have questioned why the company hasn't pursued share buybacks if it genuinely believes the stock is undervalued.
- Holly McKechnie explains that Greencoat UK Wind has by far the highest exposure to merchant electricity prices at around 40% of revenues, meaning it stands to benefit most from the current energy price spike, while most other renewable trusts have only 10-15% exposure and will see limited near-term impact.
- McKechnie notes that the UK government's October review of green energy subsidy calculations — ultimately resolved favorably for trusts in February — has left a lasting nervousness among investors about the possibility of future retrospective changes, undermining long-term revenue certainty even after a positive outcome.
- Julian Hoffman argues that ASA International's loan book growth of 33% and sub-2% delinquency rate are particularly impressive given that it operates in markets typically considered high-risk for lending, suggesting strong underlying operational execution rather than just favorable macro conditions.
- Hoffman contends that ASA International's pivot to an app-based banking model is strategically well-suited to its target markets because high mobile phone penetration in Africa — a result of countries bypassing land-based telecoms infrastructure entirely — means the customer reach of a digital platform far exceeds what a traditional branch-based model could achieve.
Topics
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