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 business win follows significant OCTG orders in H222 (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. In context, FY23 OCTG revenue was US$396m with a US$222m order position at the year-end, while the Asia-Pacific region (predominantly OCTG product sales) reported revenues of US$154m with US$143m orders on hand at the year-end.

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.