Hunting (LON:HTG) - On just 10.6 times current year and a mere 7 times prospective earnings - too cheap!

28.08.2025

This morning’s Interim Results from the precision engineering group displayed a strong performance in the first-half to end-June, especially against a tricky trading environment.

It reported revenue of $528.6m compared to $493.8m in H1 2024.

The company's EBITDA increased to $70.2m, with an EBITDA margin of 13%.

The group’s adjusted profit before tax was $43.7m, with adjusted diluted earnings of 19.6c per share and an interim dividend of 6.2c, a 13% increase from H1 2024.

The group’s sales order book stood at $451.5m, while its free cash flow was $66.2m.

Alongside the Interim Results the company also started a $40m share buyback programme.

CEO Jim Johnson stated that:

"I would like to thank all our employees for delivering a strong set of first half results, in what has been a volatile macro-economic backdrop.

Our successful delivery of orders with the Kuwait Oil Company has supported these results, and our outlook remains positive given the tender pipeline of new orders available to the Group.

We continue to make significant progress executing our Hunting 2030 Strategy.

With the recent acquisitions of Flexible Engineered Solutions and the Organic Oil Recovery technology, Hunting has added strong revenue and cash flow opportunities to the Group for the medium-term, as offshore markets continue to demonstrate robust activity, along with the oil and gas industry demanding new technologies to deliver production improvements and efficiencies.

The significant progress we have made over the last few years coupled with our strong financial performance has allowed us to enhance our shareholder returns profile, with increased dividend distributions and the share buyback, which commences today."

While commodity prices and the geopolitical landscape have been extremely volatile during the reporting period, oil and gas demand has remained steady and is likely to remain at a consistent level in the medium-to-long term.

The group's tender pipeline remains in excess of $1bn, with opportunities for new OCTG and Subsea being pursued.

While there is a level of market uncertainty that may impact the group's full year outturn, its Directors have reiterated their current guidance, underpinned by the efficiencies achieved as part of the group's ongoing restructuring programme, with a full year EBITDA of between $135m-$145m, supported by a strong balance sheet and net cash.

Analyst Alex Brooks, at Canaccord Genuity Capital Markets, rates the group’s shares as a Buy, with a 600p Target Price, compared to the current 332p.

On his current year estimates, they put the shares out on a price-to-earnings ratio of just 10.6 times, while his 2026 figures lower that even further to a mere 7.0 times.

My view is that is far too cheap for such a widespread and well-run globally operating group which is one of the leaders in its various fields.

(Profile 15.03.21 @ 275p set a Target Price of 350p*)

(Profile 12.04.23 @ 240p set a Target Price of 300p*)