Record order boosts momentum and firms guidance
Hunting has received a record US$145m OCTG order with shipments to the Kuwait Oil Company expected to start toward the end of 2024. As a result, following an in-line Q1 update, EBITDA guidance has now firmed towards the upper end of the company’s existing US$125m-135m range. We have raised our current year EBITDA estimate to US$131m (+c.7%) and by c.14% for FY25 due to this new business win.This contract follows significant OCTG (Oil Country Tubular Goods) orders in H2'22 (US$80m+ offshore China for CNOOC) and H223 (US$91m Rajasthan for Cairn Oil & Gas, Vedanta Ltd), and underscores Hunting’s strong position and momentum in international markets.
Following our upgrades, Hunting is currently trading on discounts of c.22% and c.35% on conventional P/E and EV/EBITDA metrics versus its peer group over our estimate horizon. Applying the peer group average P/E to our unchanged FY26 earnings generates a share price in line with our DCF-derived valuation (slightly higher at 434p, using US$180m as a long-term sustainable EBITDA level) leaving our existing 436p per share fair value unchanged at this stage.
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.
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