[ET Net News Agency, 5 February 2021] Credit Suisse lifted its target price for China
Oilfield Services (COSL) (02883) to HK$12.5 from HK$10.5 and maintained its "outperform"
rating.
The research house noted that CNOOC (00883) on 4 February announced a capex budget of
Rmb90-100bn for 2021 (+13-26% YoY), the highest level since 2014 and is ahead of market
expectations. The more important is that the 2021 capex allocation to Offshore China was
raised to 72% (2020/19: 70%/62%), the highest level in history.
Credit Suisse said the increase in allocation is a positive surprise to COSL, which will
likely result in a spurt in COSL's 2021 domestic work volume. It estimated COSL's jack-up
fleet utilisation (primarily Offshore China) to be close to 90%, a level typically only
seen in upcycles.
Credit Suisse now forecasted COSL to generate Rmb3.8bn net profit in 2021, which is very
close to returning to its heydays in 2010-12, where the company generated Rmb4.0-4.5bn per
annum at the early part of the upcycle. (KL)