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Dedicare: Winning market share while the market grows - ABG

Q2 report due on 15 July
Dedicare is taking market share in a growing market
New value range of SEK 82-113

Higher-than-usual need for healthcare staffing
The vacation season is usually the most difficult time to meet the healthcare staffing need and this year seems to be even more difficult than before (according to SVT Nyheter). That said, as we expect a lot of activity for staffing companies, it can be difficult to source workers from even such dedicated companies for certain periods and/or places. In Norway, meanwhile, activity continues to be strong with the NHO’s Bemanningsbarometeret (staffing barometer) showing that revenues for hiring staff within healthcare grew by 38.2% y-o-y in Q1. Dedicare has a strong market position in Norway, and we expect this trend to continue, benefitting the company. In Sweden, where competition is higher, Dedicare expanded its market share in Q1 while competitors lost ground (graph on page 3), according to the Competence Agencies of Sweden (Kompetensföretagen). These favourable data points indicate that Dedicare has strong market momentum. Finally, H&P, with an historically strong EBIT margin of >20% and a sales growth CAGR of 28% over the last seven years, will be included into the Swedish segment this quarter.

Small increase of sales growth expectations in Norway
We leave our estimates unchanged beyond updating the FX growth assumptions for the group, which gives a small negative impact. Also, we slightly raise our growth expectations in Norway by 2pp. The net effect gives a 0.5% increase of revenue for the group in Q2.

Decline in share price due to press release
The share fell on the press release (published 17/6) saying that Dedicare was seeking a legal review of the documentation contained in the joint public procurement as the company claims that it does not comply with the Swedish law on public procurement. Our view is that the public procurement is important as it could lead to unprofitable regulations, but there was no ne ...
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