Morgan Stanley has issued a research note indicating a reduction in the profit forecast for CHINA OILFIELD (02883) following its second-quarter results, leading to a cut in the target price from HK$9.1 to HK$8.0, while the "Market Perform" rating remains unchanged.

The firm noted that the contract drilling business performed better than expected, but this was offset by weaker results in the oilfield services and marine segments. As a result, the net profit forecast for 2026 has been trimmed by 5%, which also incorporates the impact of foreign exchange losses.

Looking ahead, Morgan Stanley believes that oil prices could see a correction in 2027, potentially putting pressure on drilling day rates and operating days. Consequently, the profit projections for 2027 and 2028 have also been lowered, by 8% and 5% respectively.

The brokerage highlighted that while the operating environment for contract drilling remains moderate under the current high oil price scenario, the underperformance in other business lines and the anticipated market headwinds justify the downward revisions.