Bank of America Securities: Raises China Oilfield (02883) target price to HK$12.6 and upgrades to "buy"
The profitability of CNOOC is linked to upstream capital expenditures, which usually lag behind oil prices, and require oil prices to remain at high levels for a longer period of time in order to significantly accelerate growth.
Bank of America Securities released a research report stating that the management of CHINA OILFIELD (02883) expects moderate growth in revenue and profit by 2026, and maintains a cautious view on the oil investment cycle, assuming Brent crude oil prices ranging from $50 to $65 per barrel. Although oil prices have since risen above $70 per barrel, with upside risks still present, the profitability of China Oilfield Services is linked to upstream capital spending, which typically lags behind oil prices and requires oil prices to remain at higher levels for a longer period of time to accelerate growth significantly. Although the bank maintains its profit forecast for China Oilfield Services unchanged, it has upgraded the rating from "Neutral" to "Buy" with a target price raised from 9 Hong Kong dollars to 12.6 Hong Kong dollars, equivalent to a P/B ratio of 1.06 times.
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