Bank of America Securities: Reiterates "Buy" rating on CHINA OILFIELD (02883) and lowers target price to HKD 12.

Bank of America Securities released a research report stating that it reaffirms the "buy" rating for CHINA OILFIELD (02883), with a target price reduced from 12.6 Hong Kong dollars to 12 Hong Kong dollars. Considering that about 10% of China Oilfield Services' revenue comes from the Middle East business, and the potential impact of rising fuel costs on profit, the bank has lowered the company's profit forecast for this year by 8%. China Oilfield Services' net profit for the full year of 2025 is expected to be 3.8 billion yuan, a year-on-year increase of 21%. However, its net profit for the fourth quarter alone is 632 million yuan, a quarterly decrease of 49% and a year-on-year decrease of 9%, which is lower than expected. This is mainly due to the provision of 164 million yuan made at the end of the year. For the full year, the company made provisions of 191 million yuan, of which 51 million yuan came from drilling platforms and 134 million yuan came from equipment. The revenue for the fourth quarter of last year was 15.4 billion yuan, a year-on-year increase of 5%, benefiting from the utilization rate of semi-submersible drilling platforms increasing from 60% in the fourth quarter of 2024 to 85%, and moderate growth in oilfield technology service revenue of about 3%. The gross profit reached 2.4 billion yuan, an increase of 7% over the quarter and 35% over the year, with a gross margin expanding to 15.5%, the highest level since the fourth quarter of 2021. The bank pointed out that China Oilfield Services' operating cash flow in 2025 reached 11.3 billion yuan, a year-on-year increase of 3%, with capital expenditures of 5.6 billion yuan, a year-on-year decrease of 23%, and capital expenditure guidance for 2026 is 8.4 billion yuan. The company plans to pay a final dividend of 0.282 yuan per share, maintaining a dividend payout ratio of 35%. Management expects capital expenditures of 8.4 billion yuan in 2026.