House of HR - comment

A small short squeeze this morning as the company published an extensive section on its AI exposure and held a 2-hour call. EBITDA came in right on target, but on lower volumes with higher prices. In particular, in E&C, the volume recovery is slower than expected, in part driven by the Dutch temp legislation. Management expects core volumes in E&C to start exceeding 2025 levels sometime this year. Margins are also aided by an improving care ratio. The business is stabilising as per our most recent note, but the E&C turnaround may take a little longer than modelled and now the Iranian war could add again some more pressure on the pro-cyclical business - first on STS and then on E&C. Moody’s will be the next to review their rating and management are indicating tha the sponsor is in discussions to help maintain the current B3. In aggregate, this presents a balanced update - largely according to plan. So we see no change in the future scenario tree for HoHR and are holding on to our position.