China Oilfield Services Ltd reports 220% EBITDA decline and 34.9% Revenue decline
21/03/2017 • About China Oilfield Services Ltd (
$2883) • By InTwits
China Oilfield Services Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- China Oilfield Services Ltd is a company in decline: 2016 revenue growth was -34.9%, 5 years revenue CAGR was -3.9%
- EBITDA Margin is declining: -46.7% in 2016 vs. 25.2% in 2015 vs. 39.8% in 2012
- EBITDA Margin is quite volatile: -46.7% in 2016, 25.2% in 2015, 37.0% in 2014, 40.0% in 2013, 39.8% in 2012
- China Oilfield Services Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 23.3%. At the same time it's a lot of higher than industry average of 8.2%.
- CAPEX is quite volatile: 2,146 in 2016, 5,856 in 2015, 9,841 in 2014, 8,456 in 2013, 3,643 in 2012
- The company has unprofitable business model: ROIC is at -14.3%
- It operates with high leverage: Net Debt/EBITDA is 9.3x while industry average is 4.9x
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 | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 22,105 | 27,364 | 32,993 | 23,174 | 15,086 | -34.9% |
| Gross Profit | | | | | -2,210 | |
| SG&A | 185 | | | | 566 | |
| EBITDA | 8,792 | 10,959 | 12,196 | 5,845 | -7,038 | -220.4% |
| Net Income | 4,559 | 6,716 | 7,492 | 1,074 | -11,456 | -1,166.8% |
Balance Sheet
|
|---|
| Cash | 9,815 | 9,601 | 5,432 | 12,574 | 6,071 | -51.7% |
| Short Term Debt | 1,660 | 3,804 | 3,817 | 11,452 | 5,990 | -47.7% |
| Long Term Debt | 31,710 | 27,027 | 23,320 | 23,873 | 27,337 | 14.5% |
Cash flow
|
|---|
| Capex | 3,643 | 8,456 | 9,841 | 5,856 | 2,146 | -63.4% |
Ratios
|
|---|
| Revenue growth | 20.0% | 23.8% | 20.6% | -29.8% | -34.9% | |
| EBITDA growth | 9.2% | 24.6% | 11.3% | -52.1% | -220.4% | |
| Gross Margin | | | | | -14.7% | -14.7% |
| EBITDA Margin | 39.8% | 40.0% | 37.0% | 25.2% | -46.7% | -71.9% |
| Net Income Margin | 20.6% | 24.5% | 22.7% | 4.6% | -75.9% | -80.6% |
| SG&A, % of revenue | 0.8% | | | | 3.8% | 3.8% |
| CAPEX, % of revenue | 16.5% | 30.9% | 29.8% | 25.3% | 14.2% | -11.0% |
| ROIC | 8.9% | 11.2% | 11.6% | 2.1% | -14.3% | -16.4% |
| ROE | 15.0% | 19.3% | 17.7% | 2.3% | -28.0% | -30.2% |
| Net Debt/EBITDA | 2.7x | 1.9x | 1.8x | 3.9x | | -3.9x |
Revenue and profitability
The company's Revenue dropped on 34.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 71.9 pp from 25.2% to -46.7% in 2016.
Net Income marign dropped on 80.6 pp from 4.6% to -75.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 14.2%. China Oilfield Services Ltd showed big decline in CAPEX/Revenue of 16.7 pp from 30.9% in 2013 to 14.2% in 2016. Average CAPEX/Revenue for the last three years was 23.1%.
Return on investment
The company operates at negative ROIC (-14.31%) and ROE (-27.96%). ROIC dropped on 16.4 pp from 2.1% to -14.3% in 2016. ROE dropped on 30.2 pp from 2.3% to -28.0% in 2016.
Leverage (Debt)
Debt level is 9.3x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 3.9x from 3.9x to in 2016. Debt decreased on 5.7% while cash dropped on 51.7%.
Management team
Qi Meisheng is a the company's CEO. Qi Meisheng has spent 2 years at the company.
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hans Energy Co Ltd ($554) | 40.8% | 8.0% | -4.0% | 5.5% | |
| Hilong Holding Ltd ($1623) | 23.5% | 8.3% | 5.0% | -3.6% | |
| Sinopec Engineering Group Co Ltd ($2386) | | 13.1% | 13.3% | -7.8% | -13.5% |
| Petro-King Oilfield Services Ltd ($2178) | 543.3% | 0.3% | -33.5% | -10.5% | |
| Anton Oilfield Services Group/Hong Kong ($3337) | 59.2% | 26.4% | -18.2% | -11.5% | |
| |
|---|
| Median (12 companies) | 27.6% | 9.1% | 0.5% | -27.4% | -8.4% |
|---|
| China Oilfield Services Ltd ($2883) | | 23.8% | 20.6% | -29.8% | -34.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sinopec Kantons Holdings Ltd ($934) | 1.1% | 0.7% | 4.4% | 41.1% | |
| Hilong Holding Ltd ($1623) | 39.5% | 40.3% | 39.6% | 32.6% | |
| Anton Oilfield Services Group/Hong Kong ($3337) | 45.0% | 44.3% | 31.2% | 31.8% | |
| TSC Group Holdings Ltd ($206) | 30.7% | 31.6% | 27.8% | 27.9% | |
| Jutal Offshore Oil Services Ltd ($3303) | 21.7% | 25.1% | 19.6% | 19.6% | |
| |
|---|
| Median (10 companies) | 16.9% | 17.6% | 15.8% | 19.1% | 6.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sinopec Kantons Holdings Ltd ($934) | 1.5% | 0.9% | 6.6% | 63.8% | |
| Hans Energy Co Ltd ($554) | 40.4% | 45.0% | 42.8% | 42.7% | |
| Hilong Holding Ltd ($1623) | 25.9% | 27.8% | 28.8% | 22.7% | |
| Anton Oilfield Services Group/Hong Kong ($3337) | 24.5% | 28.0% | 12.5% | 17.2% | |
| CIMC Enric Holdings Ltd ($3899) | 13.1% | 14.0% | 12.5% | 10.6% | |
| |
|---|
| Median (12 companies) | 12.4% | 14.0% | 11.0% | 8.6% | 0.9% |
|---|
| China Oilfield Services Ltd ($2883) | 39.8% | 40.0% | 37.0% | 25.2% | -46.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| SPT Energy Group Inc ($1251) | 7.4% | 5.6% | 7.9% | 23.5% | |
| Sinopec Kantons Holdings Ltd ($934) | 0.8% | 1.7% | 6.7% | 15.8% | |
| Petro-King Oilfield Services Ltd ($2178) | 13.3% | 13.3% | 75.4% | 12.3% | |
| Hilong Holding Ltd ($1623) | 16.7% | 18.9% | 48.1% | 9.6% | |
| Anton Oilfield Services Group/Hong Kong ($3337) | 12.6% | 32.2% | 22.8% | 9.5% | |
| |
|---|
| Median (12 companies) | 6.4% | 5.2% | 6.3% | 7.2% | 0.2% |
|---|
| China Oilfield Services Ltd ($2883) | 16.5% | 30.9% | 29.8% | 25.3% | 14.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sinopec Engineering Group Co Ltd ($2386) | 77.5% | 33.3% | 18.6% | 15.3% | 7.8% |
| CIMC Enric Holdings Ltd ($3899) | 20.3% | 20.0% | 21.3% | 8.9% | |
| Hilong Holding Ltd ($1623) | 15.5% | 14.8% | 12.0% | 6.0% | |
| Sinopec Kantons Holdings Ltd ($934) | 3.5% | 0.4% | 6.0% | 5.0% | |
| Yuan Heng Gas Holdings Ltd ($332) | -59.8% | -0.0% | 25.6% | 3.9% | -0.4% |
| |
|---|
| Median (12 companies) | 10.7% | 11.1% | 7.9% | 1.8% | 3.7% |
|---|
| China Oilfield Services Ltd ($2883) | 8.9% | 11.2% | 11.6% | 2.1% | -14.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hans Energy Co Ltd ($554) | 14.0x | 11.9x | 12.9x | 11.3x | |
| Yuan Heng Gas Holdings Ltd ($332) | | | 2.7x | 8.9x | 18.1x |
| Anton Oilfield Services Group/Hong Kong ($3337) | 0.0x | 0.9x | 7.4x | 6.4x | |
| Hilong Holding Ltd ($1623) | 0.9x | 1.1x | 2.6x | 3.3x | |
| Sinopec Kantons Holdings Ltd ($934) | -7.1x | -7.4x | 2.5x | 2.2x | |
| |
|---|
| Median (10 companies) | 0.0x | -0.4x | 1.8x | 2.1x | 18.1x |
|---|
| China Oilfield Services Ltd ($2883) | 2.7x | 1.9x | 1.8x | 3.9x | |
