Connecting market position and clear ambition

With positive trading momentum and order book development continuing, Hunting has outlined a clear growth strategy for the remainder of this decade. This is predicated upon further progress in traditional markets amplified by deeper penetration of newer adjacent ones and other non-oil & gas industries. In share price terms, only partial credit has been given for an improving financial performance. Yet, at current levels it is effectively discounting no growth beyond a return to pre-Covid levels of profitability - in stark contrast with management’s ambition.

Management has outlined a clear strategy to grow significantly and, in the process, diversify to derive c. 25% of group revenues from non-oil and gas sectors – including Energy Transition sub-sectors - by 2030. Explicit short, medium- and long-term targets (including revenue CAGRs of c. 16% to FY25 and c. 13% organic to FY30, EBITDA margin improvements and M&A potential also) are founded on strong existing market positions, similarities with carbon capture and geothermal sector requirements and demonstrated capabilities in certain other non-oil & gas sectors already.

We initiate coverage with a fair value of 421p per share (c.42% above current levels). Earnings growth is the primary attraction for investors currently in our opinion, although dividend growth prospects are also good. Lastly, we note that Hunting’s share price is currently sitting on a c. 30% discount to its H123 NAV per share.