China Oilfield Services Ltd Net Income dropped on 85.7% in 2015 and Revenue dropped on 29.8%
29/03/2016 • About China Oilfield Services Ltd (
$2883) • By InTwits
China Oilfield Services Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Oilfield Services Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 25.5%. At the same time it's a lot of higher than industry average of 9.6%.
- CAPEX is quite volatile: 5,856 in 2015, 9,841 in 2014, 8,456 in 2013, 3,643 in 2012, 4,596 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.1%
- It operates with high leverage: Net Debt/EBITDA is 3.9x while industry average is 3.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
China Oilfield Services Ltd ($2883) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 18,426 | 22,105 | 27,364 | 32,993 | 23,174 | -29.8% |
| SG&A | 156 | 185 | | | | |
| EBITDA | 8,052 | 8,792 | 10,959 | 12,196 | 5,845 | -52.1% |
| Net Income | 4,039 | 4,559 | 6,716 | 7,492 | 1,074 | -85.7% |
Balance Sheet
|
|---|
| Cash | 5,646 | 9,815 | 9,601 | 5,432 | 12,574 | 131.5% |
| Short Term Debt | 1,626 | 1,660 | 3,804 | 3,817 | 11,452 | 200.0% |
| Long Term Debt | 26,484 | 31,710 | 27,027 | 23,320 | 23,873 | 2.4% |
Cash flow
|
|---|
| Capex | 4,596 | 3,643 | 8,456 | 9,841 | 5,856 | -40.5% |
Ratios
|
|---|
| Revenue growth | 4.9% | 20.0% | 23.8% | 20.6% | -29.8% | |
| EBITDA growth | -3.2% | 9.2% | 24.6% | 11.3% | -52.1% | |
| EBITDA Margin | 43.7% | 39.8% | 40.0% | 37.0% | 25.2% | -11.7% |
| Net Income Margin | 21.9% | 20.6% | 24.5% | 22.7% | 4.6% | -18.1% |
| SG&A, % of revenue | 0.8% | 0.8% | | | | 0.0% |
| CAPEX, % of revenue | 24.9% | 16.5% | 30.9% | 29.8% | 25.3% | -4.6% |
| ROIC | 8.6% | 8.9% | 11.2% | 11.6% | 2.1% | -9.6% |
| ROE | 14.9% | 15.0% | 19.3% | 17.7% | 2.3% | -15.4% |
| Net Debt/EBITDA | 2.8x | 2.7x | 1.9x | 1.8x | 3.9x | 2.1x |
Revenue and profitability
The company's Revenue dropped on 29.8% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 11.7 pp from 37.0% to 25.2% in 2015.
Net Income marign dropped on 18.1 pp from 22.7% to 4.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 China Oilfield Services Ltd had CAPEX/Revenue of 25.3%. China Oilfield Services Ltd's CAPEX/Revenue increased on 8.8 pp from 16.5% in 2012 to 25.3% in 2015. Average CAPEX/Revenue for the last three years was 28.7%.China Oilfield Services Ltd has spent a lot to CAPEX (100% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.05%) and ROE (2.28%). ROIC decreased on 9.6 pp from 11.6% to 2.1% in 2015. ROE dropped on 15.4 pp from 17.7% to 2.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.9x and Debt / EBITDA is 6.0x. Net Debt / EBITDA surged on 2.1x from 1.8x to 3.9x in 2015. Debt jumped on 30.2% in 2015 while cash surged on 131% in 2015.
Appendix 1: Peers in Oil&Gas Services
Below we provide China Oilfield Services Ltd benchmarking against other companies in Oil&Gas Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Yuan Heng Gas Holdings Ltd ($332) | | 196.3% | 207.4% | 105.9% | -36.4% |
| CIMC Enric Holdings Ltd ($3899) | | 18.4% | -0.3% | 39.7% | -26.9% |
| TSC Group Holdings Ltd ($206) | -2.8% | 31.7% | 9.9% | 34.0% | |
| Sinopec Engineering Group Co Ltd ($2386) | | 25.9% | 13.1% | 13.3% | -7.8% |
| Jutal Offshore Oil Services Ltd ($3303) | 15.3% | 23.4% | 46.2% | 6.9% | |
| |
|---|
| Median (12 companies) | 15.3% | 28.8% | 9.1% | 0.5% | -11.5% |
|---|
| China Oilfield Services Ltd ($2883) | | 20.0% | 23.8% | 20.6% | -29.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hilong Holding Ltd ($1623) | 41.0% | 39.5% | 40.3% | 39.6% | 32.6% |
| Anton Oilfield Services Group/Hong Kong ($3337) | 41.5% | 45.0% | 44.3% | 31.2% | 31.8% |
| TSC Group Holdings Ltd ($206) | 38.0% | 30.7% | 31.6% | 27.8% | |
| Jutal Offshore Oil Services Ltd ($3303) | 20.3% | 21.7% | 25.1% | 19.6% | |
| CIMC Enric Holdings Ltd ($3899) | 18.7% | 19.5% | 20.4% | 18.8% | 18.6% |
| |
|---|
| Median (10 companies) | 19.5% | 16.9% | 17.6% | 15.8% | 18.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hans Energy Co Ltd ($554) | -38.3% | 40.4% | 45.0% | 42.8% | 42.7% |
| Hilong Holding Ltd ($1623) | 28.5% | 25.9% | 27.8% | 28.8% | 22.7% |
| SPT Energy Group Inc ($1251) | 24.7% | 23.8% | 19.8% | 14.1% | -36.0% |
| TSC Group Holdings Ltd ($206) | 11.7% | 11.4% | 14.0% | 13.2% | |
| Anton Oilfield Services Group/Hong Kong ($3337) | 18.6% | 24.5% | 28.0% | 12.5% | 17.2% |
| |
|---|
| Median (12 companies) | 12.0% | 12.4% | 14.0% | 11.0% | 10.6% |
|---|
| China Oilfield Services Ltd ($2883) | 43.7% | 39.8% | 40.0% | 37.0% | 25.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro-King Oilfield Services Ltd ($2178) | 8.2% | 13.3% | 13.3% | 75.4% | 12.3% |
| Hilong Holding Ltd ($1623) | 17.1% | 16.7% | 18.9% | 48.1% | 9.6% |
| Anton Oilfield Services Group/Hong Kong ($3337) | 13.3% | 12.6% | 32.2% | 22.8% | 9.5% |
| Jutal Offshore Oil Services Ltd ($3303) | 6.6% | 12.8% | 8.4% | 12.9% | |
| SPT Energy Group Inc ($1251) | 6.8% | 7.4% | 5.6% | 7.9% | 23.5% |
| |
|---|
| Median (12 companies) | 6.7% | 6.4% | 5.2% | 6.3% | 9.5% |
|---|
| China Oilfield Services Ltd ($2883) | 24.9% | 16.5% | 30.9% | 29.8% | 25.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Yuan Heng Gas Holdings Ltd ($332) | | -59.8% | -0.0% | 25.6% | 3.9% |
| CIMC Enric Holdings Ltd ($3899) | 19.4% | 20.3% | 20.0% | 21.3% | 8.9% |
| Sinopec Engineering Group Co Ltd ($2386) | 59.6% | 77.5% | 33.3% | 18.6% | 15.3% |
| Hilong Holding Ltd ($1623) | 19.0% | 15.5% | 14.8% | 12.0% | 6.0% |
| TSC Group Holdings Ltd ($206) | 5.2% | 6.7% | 9.1% | 10.5% | |
| |
|---|
| Median (12 companies) | 8.3% | 10.7% | 11.1% | 7.9% | 3.9% |
|---|
| China Oilfield Services Ltd ($2883) | 8.6% | 8.9% | 11.2% | 11.6% | 2.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hans Energy Co Ltd ($554) | | 14.0x | 11.9x | 12.9x | 11.3x |
| Anton Oilfield Services Group/Hong Kong ($3337) | -0.5x | 0.0x | 0.9x | 7.4x | 6.4x |
| Yuan Heng Gas Holdings Ltd ($332) | | | | 2.7x | 8.9x |
| Hilong Holding Ltd ($1623) | 0.8x | 0.9x | 1.1x | 2.6x | 3.3x |
| Sinopec Kantons Holdings Ltd ($934) | -1.2x | -7.1x | -7.4x | 2.5x | 2.2x |
| |
|---|
| Median (11 companies) | -0.3x | 0.0x | -0.4x | 1.8x | 3.3x |
|---|
| China Oilfield Services Ltd ($2883) | 2.8x | 2.7x | 1.9x | 1.8x | 3.9x |
