International and Subsea markets continue to drive Hunting forward. A pre-close update indicated H124 EBITDA of c.US$60m (up US$10m+ year-on-year) plus a c.$700m period end group order book (up c.US$135m since December). There have been headwinds in certain other markets, but overall group momentum has again led to slightly firmer guidance for the current year together with an expectation of good progress to follow in FY25. The company was modestly geared at the period end.
A c. 200bp increase in EBITDA margin and group revenue c. 3% higher y-o-y resulted in a strong overall increase in H124 profitability. Subsea had a notably stronger H1 trading period supported by shipments of titanium stress joints for offshore Guyana projects; OCTG continued to trade well and it secured significant new orders in the first half. Weaker onshore North American drilling activity did impact Perforating Systems’ performance and three site consolidation actions are being taken. Hunting ended H1 in a modest net debt position of c. US$10m (company basis) and has now guided to a more significant expected net cash balance between US$30m-40m by the year end.
At the end of H1, the group order book position increased to c. US$700m, boosted by significant new OCTG work. This has settled back slightly from an early June peak following the second OCTG announcement but still represented a marked uplift compared to the beginning of the year. The H124 performance together with forward visibility in several areas into H125, has informed firmer guidance for current year EBITDA (to a mid-point of US$136m, up US$4m) and an expected outcome range for FY25 (mid-point c. US$167m).
Hunting’s share price has generally trended upwards YTD and order book gains have been well received. Nevertheless, on conventional metrics the company is effectively trading on value (rather than growth)-level multiples in FY25 and FY26. Our updated DCF and company fair value at 436p/share is unchanged and modestly above the current share price.
