Report
Toby Thorrington

Clear strategic momentum in evidence

High profile order shipments were a significant influence on H1’25 performance against the prior year – positive for OCTG, adverse for Subsea – driving overall profitability ahead y-o-y. Portfolio actions, including two acquisitions in higher margin, higher growth subsectors, will bring further benefit to future earnings. Hunting’s net cash position retains balance sheet optionality for its capital allocation policy which balances growth aspirations with shareholder returns.

At group level, Hunting delivered revenue and EBITDA (100% owned operations) growth of 7% and 13% respectively in H1’25. A small gross margin increase (+40bp to 27.8%) was supplemented by good opex control – particularly in admin expenses, generating a 70bp uplift in EBIT margin from wholly owned operations.

Strong working capital inflow performance boosted free cash flow significantly compared to the prior year which was applied to acquisitions, dividends and treasury share purchases leaving period end net cash at c. U$75m (down U$25m over H1). The interim dividend was the first to be declared under the updated capital allocation policy and, accordingly, was 13% above H1’24.

Company outlook commentary points to “choppy markets” indicating some scope for variance against unchanged FY25 EBITDA guidance of U$135m-145m. Across most areas, however, order books provide reasonable coverage to the year end and we leave our projected EBITDA at U$130m, with subsequent years profitability unchanged.

We increase our fair value to 400p per share – this is derived from EV/EBITDA benchmarking plus DCF analysis. A prospective yield on the dividend of 3.0% and expectation of it growing 13% annually, plus a new share buyback programme, should all offer support for the shares in our view.
Underlying
Hunting PLC

Hunting is a holding company. Co.'s segments are: Hunting Titan, which provides perforating products; U.S, which supplies connections, oil country tubular goods (OCTG), drilling tools, subsea equipment, and intervention tools, among others, for the U.S. and overseas markets; Canada, which manufactures connections and accessories for operators in Canada; Europe, which supplies OCTG and well intervention equipment to operators in the North Sea; Asia Pacific, which manufactures connections and OCTG supply; Middle East, Africa and Other, which sells intervention tools in the Middle East and Africa; and Exploration and Production, which comprises its exploration and production activities.

Provider
Equity Development
Equity Development

​Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.

Analysts
Toby Thorrington

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