Shares digital

Hunting (HTG) Finals – PTP: £90.7m (£85.8m) Divi: 5.7p (5.2p)

Results for 2007 were ahead of market expectations again although not by as a wide a margin as they have been in the past. An oil price of $102 is driving investment in the oil services sector and the the fundamental picture for Hunting remains positive, increasing investment in exploration is driving Hunting Energy Services, a supplier of products used for drilling wells and the other main subsidiary in the business, Gibson Energy, is benefiting from the increased interest in the Abathasca Tar Sands in Alberta, Canada. The former saw profits of £50.4 million, up 37%, while the latter provided a return of £48.4 million compared with £47.3 million in 2006.

CEO Dennis Proctor says: ‘At current price levels, oil and gas producers are once again increasing their investment to boost reserves and production capabilities. This will continue to provide excellent growth opportunities for the oil service industry.’ This update pushed the stock higher, currently trading for around 750p. And in response to the results, broker Seymour Pierce reiterated its ‘buy’ recommendation, increasing its 2008 pre-tax profit estimate by 2% from £98.1 million to £100 million, and its price target from 820p to 850p. Analyst Peter Hitchens says: ‘The shares are trading at a discount to the sector on the basis that its businesses are seen as low margin and hence of inferior quality. We maintain that this is wrong and that a re-rating is justified.’

Shares says: On a PE of 16.64, which compares favourably with a sector average of 19.36.

by: Tom Sieber