5 Russian and Asian Energy Stocks With High Profitability, Business Predictability

By | June 30, 2020

In light of Chesapeake Energy Corp. (NYSE:CHK) filing for bankruptcy protection over the weekend and strong economic data from Asian and European markets, five energy companies that have shown high profitability and business predictability are Yantai Jereh Oilfield Services Group Co. Ltd. (SZSE:002353), Shaanxi Yanchang Petroleum Chemical Engineering Co. (SHSE:600248), China Aviation Oil Corp. (SGX:G92), PJSC Lukoil (MIC:LKOH) and Pryce Corp. (PHS:PPC) according to the All-in-One Screener, a Premium feature of GuruFocus.

Chesapeake files for Chapter 11 bankruptcy protection

On Sunday, Oklahoma City-based Chesapeake Energy announced in a press release that it voluntarily filed for Chapter 11 protection to facilitate a comprehensive balance sheet restructuring, including the elimination of $7 billion in long-term debt. The company secured $925 million in debtor-in-possession financing per the restructuring support agreement terms.

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Chesapeake also agreed to the principal terms of $2.5 billion in exit financing, which includes a new revolving credit facility of $1.75 billion and a term loan of $750 million. Shares tumbled over 7% following the announcement.

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Crude oil prices soar on strong Asian and European economic data

On Monday, crude oil prices surged on the heels of strong Asian and European economic data, with Brent crude prices up 1.8% to $41.76 per barrel and West Texas Intermediate crude prices up 3.1% to $39.70 per barrel. CNBC reported that overall sentiment in the eurozone improved from 75.7 in June from 67.5 in May according to European Commission data, while industrial company profits in China rose in May, the first month of increasing profits over the past six months.

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As such, investors might seek opportunities in European and Asian energy companies that have shown high profitability and business predictability over the past five to 10 years. The Screener listed five companies that have a financial strength rank of at least 7, a profitability rank of at least 7, a GuruFocus business predictability rank of at least two stars and a five-year operating margin growth rate of at least 1%.

Yantai Jereh Oilfield Services Group

Yantai Jereh Oilfield Services Group manufactures oilfield equipment and provides oilfield services around Asia. GuruFocus ranks the Chinese energy company’s profitability 8 out of 10 on the back of consistent revenue growth and profit margins that are outperforming over 85% of global competitors.

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Yantai Jereh’s financial strength ranks 7 out of 10 on the back of debt ratios outperforming over 68% of global competitors and Altman Z-scores exceeding the safe threshold of 3.

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Shaanxi Yanchang Petroleum

Shaanxi Yanchang Petroleum engages in the construction of petrochemical products. GuruFocus ranks the Xi’an, China-based company’s financial strength and profitability 7 out of 10 on several positive investing signs, which include robust interest coverage and expanding operating margins despite a modest Piotroski F-score of 4 and contracting gross margins.

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Shaanxi Yanchang Petroleum’s valuation ranks 7 out of 10 on the back of price valuations trending near 10-year lows despite underperforming over 70% of global competitors.

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China Aviation Oil

Singapore-based China Aviation Oil transports fuel oil, gas oil, aviation gas and crude oil around the Asia-Pacific region. GuruFocus ranks the company’s financial strength 8 out of 10 on several positive investing signs, which include a double-digit Altman Z-score and debt ratios that are outperforming over 85% of global competitors.

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PJSC Lukoil

PJSC Lukoil engages in a wide range of oil exploration, refining and production activities. GuruFocus ranks the Russian energy company’s profitability 9 out of 10 on the back of several positive investing signs, which include a 4.5-star business predictability rank and operating margins that are outperforming over 64.19% of global competitors.

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Pryce

Pryce engages in LPG, industrial gas and fuels refining and marketing. GuruFocus ranks the Filipino energy company’s financial strength and profitability 8 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and debt ratios that are outperforming over 71% of global competitors.

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Disclosure: No positions.

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This article first appeared on GuruFocus.