Citigroup: CHINA OILFIELD (02883) quarterly performance falls below expectations due to foreign exchange losses, reaffirms "buy" rating.

Citi released a research report stating that it maintains a "buy" rating on CHINA OILFIELD (02883) with a target price of HK$11.6, equivalent to predicting a 1 times market-to-book ratio for 2026, one standard deviation higher than the average level. China Oilfield Services reported a first-quarter net profit of 856 million RMB, a year-on-year decrease of 4%, but a quarterly increase of 35%. Excluding approximately 300 million RMB in exchange losses, core profit was 1.16 billion RMB, a year-on-year increase of 34%, but a quarterly decrease of 6%, overall quarterly performance below expectations. Management explained that the significant exchange losses mainly came from currency differences resulting from accounting treatment between the parent company and overseas subsidiaries, rather than operational reasons. The company is actively considering adjusting functional currencies or implementing debt-to-equity measures to reduce future impacts. The report points out that in terms of drilling business performance, the utilization rates of jack-up platforms and semi-submersible platforms were 91% and 97%, respectively. The oilfield technology services segment saw a 5% increase in revenue and an 18% increase in EBIT in the first quarter, mainly driven by the rapid growth of overseas integrated services.