Bank of America Securities has reiterated a "Buy" rating for CHINA OILFIELD (02883) while reducing its target price from HK$12.6 to HK$12. The adjustment reflects concerns that approximately 10% of the company's revenue comes from Middle Eastern operations, coupled with rising fuel costs that could impact profitability. As a result, the firm has lowered its 2025 profit forecast for CHINA OILFIELD by 8%.

In 2025, CHINA OILFIELD reported a net profit of RMB 3.8 billion, representing a 21% year-on-year increase. However, fourth-quarter net profit stood at RMB 632 million, declining 49% quarter-on-quarter and 9% year-on-year, falling short of expectations. This underperformance was primarily due to a write-off of RMB 164 million recorded at year-end. For the full year, the company recognized impairments totaling RMB 191 million, including RMB 51 million from drilling platforms and RMB 134 million from equipment.

Fourth-quarter revenue reached RMB 15.4 billion, up 5% year-on-year, supported by an increase in the utilization rate of semi-submersible drilling platforms from 60% in Q4 2024 to 85%, along with modest growth of about 3% in oilfield technology services revenue. Gross profit for the quarter amounted to RMB 2.4 billion, rising 7% quarter-on-quarter and 35% year-on-year, with the gross margin expanding to 15.5%—the highest level for a fourth quarter since 2021.

The report noted that CHINA OILFIELD's operating cash flow for 2025 reached RMB 11.3 billion, a 3% year-on-year increase, while capital expenditures totaled RMB 5.6 billion, down 23% year-on-year. The company's capital expenditure guidance for 2026 is set at RMB 8.4 billion. CHINA OILFIELD plans to distribute a final dividend of RMB 0.282 per share, maintaining a payout ratio of 35%. Management expects capital expenditures in 2026 to remain at RMB 8.4 billion.