Soco1

Overview Key strengths Key risks Leading market position in its asset integrity niche markets. Medium sized compared with global testing, inspection, and certification (TIC) peers. Good revenue visibility provided by high share of recurring revenue through regulation and strong customer relationships. Exposure to the cyclical construction end market. Low customer concentration, with a diversified client base across Europe and the U.S. and the top 20 clients accounting for less than 20% of revenue. Relatively inflexible cost base, as largely composed of highly educated employees versus other business services peers, which also exposes the company to wage inflation. We expect sales will increase 13.5%-14.5% on a reported basis to close to €1.0 billion for the full year 2021, up from our

...We forecast Soco 1 (Socotec) will post strong performance in 2021. We expect sales will increase 13.5%-14.5% on a reported basis to close to 1.0 billion for the full year 2021, up from our previous estimate of 10%-11%. This largely reflects increased growth from the acquisition of Hanselman Group in the Netherlands, which marks Socotec's entry into this market. On a geographic basis, Italy led the growth, since it benefited from works related to the renovation of aging infrastructures. We expect U.S. performance will lag, posting negative growth due to some persistent impact from COVID-19. We expect very strong performance on the margin side for 2021, with S&P Global Ratings' adjusted margins of 16.5%-17.0% up from our previous forecast of 15.0%-16.0% and compared with 12.2% in...

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