Hunting (LON:HTG) - Onwards and Upwards - new research report freely available here: https://www.equitydevelopment....
One year on from Hunting’s 2030 Strategy launch some good progress has been made towards these long-term targets in mixed market conditions. H124 EBITDA came in at U$60.3m (+c.23% y-o-y), in line with pre-close commentary.
Successful order execution in International and Subsea markets more than offset largely weaker North American oil and gas demand. An elevated order book position, re-affirmed EBITDA and year-end net cash guidance (both raised at the end of H1), together with a 10% interim DPS uplift, all project a confident outlook.
Strong H124 EBITDA increases from Subsea, OCTG and Advanced Manufacturing operations were partly offset by a lower Perforating Systems’ contribution, but good y-o-y and sequential progress was achieved by the Group overall, sustaining recent trends.
Hunting’s c. U$700m order book position at the end of June supports our unchanged core profit estimates, albeit on slightly lower FY24 revenues factoring in current Perforating Systems’ run rates. We now include JV/Associates in EBITDA, consistent with the revised company presentation, and have trimmed the current year contribution here largely to reflect the India JV start-up position.
Hunting’s c.40% YTD share price uplift was effectively attained in May - including a boost from OCTG orders at that time – and has largely traded in the 400p-460p range subsequently. Having significantly outperformed its peer group, valuation metrics are now more aligned with these peers on an FY25 P/E basis but remain on a c.20% EV/EBITDA discount.
Successful delivery of the KOC OCTG orders over the next nine months is an important near-term focus. Ongoing material order success and improving visibility at higher levels of profitability in the medium term and beyond will be the key drivers of future share price performance and we leave our existing fair value of 436p / share unchanged for now.
