Hunting – despite recent contract wins, certain investors are expressing disappointment, shares now 246.50p, brokers TP 450p, AGM and Trading Update this Wednesday

14.04.2025

Two weeks into this year, 15th January, the shares of Hunting (LON:HTG) were looking very strong, having risen 52p to 352.50p the day before following its 2024 Trading Update.

Now the shares are trading at just 246.50p, perhaps reflecting the recent market turmoil around Trump’s Tarriffs.

Activist Pressure

Now, there is a swell of discontent about the group, with one $6bn AUM fund group, Oasis Management, pressing its activist investor views that the cash-rich £406m-capitalised group should either go on an acquisition splurge or embark upon a major share buy-back scheme.

It will be interesting to see just how the group’s Management stands up to such persuasive comment at its AGM being held at 10.30am at the Royal Automobile Club in London’s Pall Mall this coming Wednesday.

The Business

Hunting is a global precision engineering group, which provides quality-assured products and services for the geothermal and carbon capture, aviation, commercial space, defence, medical, and power generation sectors.

Its five key product groups are: Perforating Systems, OCTG, Advanced Manufacturing, Subsea, and Other Manufacturing.

Non-oil and gas revenue is derived across all of those key product groups.

The company maintains a corporate office in Houston and is headquartered in London.

As well as the UK, the company has operations in China, India, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, the UAE and in the USA.

The group has five operating segments: Hunting Titan; North America; Subsea Technologies; Europe, Middle East and Africa, and Asia Pacific.

Its manufacturing footprint is around 50% in the United States, with the balance widely spread in Europe, Asia & the Middle East.

It is a specialist manufacturer of customised, high-value components typically for the oil and gas industry, with its chief product lines being perforating guns and associated systems, oil country tubular goods premium connections, subsea, and advanced manufacturing.

Almost all of its businesses provide high-performance equipment, typically manufactured to tight tolerances using CNC equipment and to a mixture of Hunting and third-party specifications.

Buyers for its products include the oil service majors such as Schlumberger, Baker Hughes & Halliburton, with which it also competes, as well as oil companies directly and a wide range of customers in other industries.

Its manufacturing footprint serves these customers worldwide, and hence activity in one region may be used for projects elsewhere in the world.

The 2024 Finals

Revenues for the year to end-December 2024 were $1,048.9m ($929.1m), while adjusted pre-tax profits were $75.6m ($50.0m), with earnings of 31.4c (20.3c) and paying a dividend of 6.0c (5.0c) per share.

With some $902m of net assets, the group had around $105m net cash.

CEO Jim Johnson stated that:

"I would like to thank our workforce and senior leadership team for delivering a further year of revenue, EBITDA and adjusted earnings growth, despite the volatile energy markets reported in 2024.

Hunting continues to deliver on its 2030 strategic objectives, supported by strong offshore and international markets.

Our cash generation in the year has also been outstanding, and we now look to deploy this to acquisitive growth and investments to enhance productivity and stronger dividend distributions."

The Equity

There are 164.94m shares in issue.

Schroder Investment Management holds 8.09% of the equity, while other large holders include Hunting Investments (6.67%), Oasis Management ( 5.13%), JP Morgan Asset Management (5.12%), Franklin Mutual Advisers (5.07%), Aberdeen Investment Management (5.04%), GLG Partners (4.99%), Rathbones Investment Management (3.78%), Orbis Investment Management (3.14%) and Dimensional Fund Advisors (2.64%).

Analyst’s Views

Some eleven analysts follow the company, with the vast majority giving the shares a Buy rating.

Last week Jefferies cut its Target Price on its Buy rating for the group’s shares from 450p to 420p.

Daniel Slater, at Zeus Capital, has a Buy out on the group, with a 450p TP.

In My View

I would back the Management!

Hunting Subsea

This group’s shares look cheap to me at 246.50p, especially considering that its profits are on the rise and that it has stacks of cash in the bank.