[ET Net News Agency, 19 January 2018] Deutsche Bank lifted its target price for China
Oilfield Services (COSL)(02883) to HK$12.11 from HK$9.13, and maintained its "buy" rating.
The research house said the earnings recovery story for COSL continues, with the company
turning to profit since 2Q 2017 after aggressive cost cuts.
It said COSL also continues to adjust its business structure to adapt to the
lower-for-longer oil price environment by announcing it would off-load its two jack-ups -
"HYSY701" and "HYSY702" - to its sister company COOEC.
COSL's reduced cost base has made it highly competitive when bidding for overseas
contracts starting in 2017. COSL secured three new semisub contracts in July 2017 and has
now signed eight contracts outside of CNOOC overseas.
Revenue has been COSL's weak point in 2017, but DB expects revenue to rebound alongside
CNOOC's capex recovery, which the research hosue believes will be 20% in 2018. Further, it
believes the offshore drilling market has finally bottomed and that utilization rates and
day rates will gradually rebound with higher oil prices. (KL)