Fitch negative on Anton's outlook

Fitch Ratings has revised its rating outlook on Anton Oilfield Services Group, one of the mainland's largest privately owned oilfield services firms, to negative from stable, citing lower profit margins, customers' spending cuts and slower payments.

The ratings agency said the negative outlook reflected stiffer competition and reduced spending on new projects by key state-backed oil and gas firms.

"While we expect the order flow to independent oilfield services providers to improve in the coming months, we believe [Anton] will have to deal with trends of higher competition, lower margins and higher accounts receivable days that are likely to outlast the industry downturn," Fitch said.

It affirmed Anton's BB long-term issuer default and senior unsecured debt rating.

The outlook revision came a week after Anton reported a worse-than-expected 83 per cent plunge in net profit to 27.4 million yuan (HK$34.57 million) for the first half, citing higher finance costs and "clients' changed operating plans".

This coincided with a ramp-up in "hydraulic fracking" capacity by 85 per cent in the 12 months to June to help clients extract oil and gas in underground formations through injecting pressurised water and chemicals.

Anton's share price fell 16.3 per cent in the two trading days after it released the results. The stock closed 1.76 per cent higher yesterday at HK$3.46.