KGI: China Oilfield Services Limited (2883 HK) – Three-digit oil prices finally came
alanyeo
BUY Entry – 8.5 Target – 9.5 Stop Loss –8.0
China Oilfield Services Limited is a comprehensive oilfield service provider. The Company mainly operates through four business segments. The Drilling Services segment is mainly engaged in the provision of oilfield drilling services. The Oil Field Technical Services segment is mainly engaged in the provision of oilfield technical services, including the logging, drilling fluids and directional drilling services. The Geophysical and Engineering Exploration Services segment is mainly engaged in the provision of seismic prospecting and engineering exploration services. The Marine Support Services segment is engaged in the transportation of supplies, including the delivery of crude oil, as well as refined oil and gas products. The Company mainly operates its businesses in domestic and overseas markets.
The Black Swan event eventually happened. Russian forces attacked targets across Ukraine after President Vladimir Putin ordered an operation to “demilitarize” the country. Oil prices surged to the high back in August 2014. Brent and WTI arrived at above US$100/bbl. Beforehand, the US and the allies imposed sanctions on Russia, pushing commodities prices (crude oil and agricultural products) to new highs.
Inflation shall go higher in the near term. The US, Europe, and China released their inflation data recently, showing that inflation pressure is still high. Oil and gas is a good hedging against inflation or stagflation amidst the rate hike cycle. The soaring oil price will gradually pull some investments back in the sector given clean energy investment is overheated at the moment.
The updated market consensus of the EPS growth in FY22/23 is 34.6%/19.3% YoY respectively, which translates to 10.6x/8.9x forward PE. Current PER is 17.1x. Bloomberg consensus average 12-month target price is HK$9.93.
