In-line FY23 update, further progress anticipated

Good revenue progress, a strong EBITDA uplift (and margin expansion), an ungeared year-end balance sheet and the in-year launch of an ambitious 2030 strategy represents a healthy FY23 scorecard for Hunting. Furthermore, additional order book growth and unchanged management guidance positions the company well to achieve further progress.

A number of large contract awards announced at the end of FY22 and as FY23 progressed contributed meaningfully to the FY23 outturn. In addition, Hunting ended the year with a record US$575m order book (versus US$473m a year earlier).

Hunting’s balance sheet is confirmed to be broadly funds neutral at the end of FY23: indicative, we believe, of good cash collection in H2/Q4 on an elevated revenue base. Together with further anticipated earnings progress in FY24 and FY25 feeding into positive cash generation, this provides a strong platform for prospective M&A activity and potential further earnings upside.

ED estimates are unchanged at this stage, as are previously identified peer group discounts of c. 20-30%. Our fair value is also unchanged in US dollar terms, but after adjusting for FX changes now translates to 407p / share - still almost 50% higher than current levels.