Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ): BCG Matrix [Dec-2025 Updated]

Jereh's portfolio is a tale of strategic pivoting: high‑margin, fast‑growing stars-electric fracturing, overseas EPC and gas compression-are driving top‑line momentum and justify heavy CAPEX and international expansion, while mature cash cows like diesel fracturing, coiled tubing and aftermarket parts fund R&D and green ventures; early‑stage question marks in battery materials, recycling and blade/PV reuse command aggressive investment but uncertain payback, and low‑return domestic services, waste treatment and legacy components are ripe for pruning-how management reallocates cash from steady incumbents to scale winners will determine whether Jereh becomes a global energy transition leader or overextends into noncore risks.

Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ) - BCG Matrix Analysis: Stars

Stars

Electric fracturing equipment

Electric fracturing equipment is a Star for Jereh, driven by rapid penetration into energy-transition-driven fracturing markets. Penetration in target markets is expected to rise to 30% in 2025 from ~7% in prior years, reflecting accelerated replacement of diesel spreads with electric systems. Domestic gross profit margin is approximately 65%, rising to ~75% in North America. Jereh captured 100% of major domestic tenders such as PetroChina's 2023-2024 electric fracturing procurement rounds. The company's 7,000 HP electric fracturing trailer - stated as the most powerful in the world - underpins competitive positioning and market-share capture amid a global shale equipment market worth tens of billions RMB. Capital expenditure remains robust to support scale-up of rental and sale fleets.

Key metrics for electric fracturing

Highlights

• High-margin product mix with 65-75% gross margins across regions.
• Leading domestic market share evidenced by 100% tender wins.
• Technology and CAPEX advantage via highest-power electric spreads.

Overseas oil & gas engineering services (EPC & complex projects)

Overseas engineering services are a Star, with first-half 2025 revenue up 38.38% year-on-year to RMB 3.295 billion. This segment includes multi-hundred-million-dollar EPC contracts such as a USD 855 million (RMB 6.126 billion) natural gas project in Algeria and a USD 920 million intelligent oilfield project in the UAE. Gross margin for overseas operations improved to 37.76% in 2025, reflecting pricing power and execution capability in the MENA region. Total order backlog reached RMB 12.386 billion by mid-2025, a 34.76% increase year-on-year. Strategic localization agreements such as with ADNOC Drilling increase lifecycle capture and onshore service penetration in the Gulf Cooperation Council (GCC) markets.

Key metrics for overseas engineering services

Highlights

• High-value EPC contracts driving revenue scale and margin expansion.
• Backlog growth (34.76%) supports revenue visibility and execution leverage.
• Regional strength in MENA with strategic local partnerships.

Natural gas compression & infrastructure equipment

Natural gas compression and infrastructure equipment comprises a Star segment, with revenue growth of 88.14% in H1 2025 and contributing nearly 30% of total group revenue. The segment benefits from global natural gas demand growth (CAGR >10%) and strategic long-term development contracts including a 25-year development deal for Iraq's Mansouria gas field. Jereh acts as a global packager for Ariel Corporation, supplying high-end boosting and liquefaction units; gross profit margin in this sector rose by 6.62 percentage points to 23.74% in 2025. Elevated CAPEX across Central Asia and Africa on gas field surface engineering projects further cements the business as a high-growth leader.

Key metrics for natural gas compression & infrastructure

Highlights

• Rapid revenue expansion (+88.14%) and substantial revenue mix (~30% of group).
• Improving margins due to demand for high-end compression and liquefaction units.
• Long-duration field development contracts provide stable, high-visibility cashflows.

Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ) - BCG Matrix Analysis: Cash Cows

Traditional diesel-driven fracturing equipment remains a primary cash generator with a stable gross profit margin of approximately 45% as of late 2024. While the market is maturing and shifting toward electrification, the existing fleet of diesel units continues to provide steady replacement and maintenance revenue. Jereh holds a dominant domestic market share in this category, supported by long-term relationships with China's 'Big Three' national oil companies. The segment requires minimal new CAPEX compared to emerging technologies, allowing the company to harvest significant cash flow to fund new energy ventures. Reported cash flow from operations surged by 410% in early 2025, largely driven by the reliable performance of these established equipment lines.

Wellbore and coiled tubing equipment maintain high profitability with gross margins often exceeding 40% in the current fiscal period. Jereh is the largest coiled tubing service provider in China, benefiting from a mature market where it holds a significant competitive advantage in integrated equipment and software. This business unit operates in a stable market environment with a low growth rate but high relative market share, typical of a 'Cash Cow.' The company's 2025 consolidated financials attribute these traditional segments to the group's foundational net profit margin of 19.7%, reflecting steady demand for well completion and maintenance services and consistent ROI without the need for aggressive market expansion.

Equipment maintenance and spare parts sales continue to provide high-margin, recurring revenue streams across the company's global service network. This segment accounts for a stable portion of the 15.73 billion RMB trailing twelve-month revenue as of September 2025. With products present in over 70 countries and supported by 50+ global branches, the installed base of Jereh equipment creates a captive market for parts and technical support. The ROI for this segment is exceptionally high because it leverages existing infrastructure and a global workforce of over 7,100 employees. This unit acts as a stabilizer, ensuring financial liquidity even during periods of volatility in primary equipment sales.

• Harvest strategy: prioritize cash extraction from diesel fracturing and coiled tubing segments to fund electrification and hydrogen R&D.
• Optimize inventory and logistics for parts to preserve gross margins and shorten cash conversion cycle (targeting DSO/ DPO improvements of 10-15% vs. 2024 baseline).
• Reinvest a portion (~20-30%) of segment-level free cash flow into retrofitting service fleets for hybrid/electric conversions while maintaining core maintenance CAPEX at <5% of segment revenue annually.

Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ) - BCG Matrix Analysis: Question Marks

Dogs - Question Marks: lithium-ion battery anode materials, battery recycling & regeneration, wind turbine blade and photovoltaic module recycling are positioned as high-growth but low‑share businesses within Jereh's portfolio. These units demand heavy CAPEX and R&D while contributing a small fraction of consolidated revenue, creating a classic Question Mark profile that may convert to Stars or degrade into Dogs absent scale or technological advantage.

The lithium-ion battery anode materials initiative targets a planned total capacity of 400,000 tpa, with the Tianshui project commencing trial operations for the 100,000‑ton first phase in 2023. Initial facility CAPEX for the first phase is estimated at RMB 2.5 billion. Group consolidated revenue stood at RMB 13.35 billion (latest reported), while new energy & recycling revenue grew by 7.93% in 2024 yet remains a minor share.

Key quantitative context and dependencies:

• Group total revenue: RMB 13.35 billion (latest reported period).
• New energy & recycling revenue growth: +7.93% in 2024 but represents low absolute share (<5% estimated).
• Tianshui first-phase CAPEX: RMB 2.5 billion; full 400,000 tpa rollout requires multiples of first-phase investment.
• Company R&D commitment: no less than 5% of annual revenue directed toward green technologies and product development.
• Battery recycling market CAGR: market research consensus typically projects >20% over next 5-10 years, but entry barriers and regulations vary by region.

Principal risks:

• Market share uncertainty: entrenched incumbents in anode materials (large chemical and battery-material companies) may limit Jereh's share despite high EV growth.
• Capital intensity: RMB 2.5 billion for initial phase plus further scale-up funding increases leverage and payback risk.
• Technology & process risk: recycling/regeneration economics hinge on breakthrough recovery rates, yield, and cost reductions.
• Regulatory dependence: incentives, subsidies, and OEM take-back requirements materially affect recycling unit economics.
• Revenue lag: current revenue contribution negligible; prolonged ramp-up increases risk of being labeled a Dog if growth stalls.

Key success factors to convert Question Marks into Stars:

• Achieve economies of scale in anode material production to lower unit cost and improve margins versus incumbents.
• Demonstrate validated, high-recovery battery recycling technologies that yield competitive cost per kWh recovered.
• Leverage "oil & gas + new energy" integration to cross-utilize mechanical separation, waste-treatment expertise, and existing customer networks.
• Secure strategic partnerships with OEMs, battery makers, or specialized recyclers to lock in feedstock and offtake.
• Maintain R&D spend (≥5% revenue) focused on process intensification, automation, and circular-economy value capture.

Operational and financial indicators to monitor:

• Monthly/quarterly ramp rates for Tianshui 100,000 tpa line (utilization % vs nameplate).
• Unit production cost (RMB/ton) for anode materials vs market benchmark.
• CAPEX-to-sales ratio during scale-up phases and projected IRR/payback period.
• Battery recycling recovery rate (%) and cost per kWh recovered.
• Revenue share of new energy & recycling as % of group revenue (target >15% to shift portfolio balance).

Yantai Jereh Oilfield Services Group Co., Ltd. (002353.SZ) - BCG Matrix Analysis: Dogs

Domestic oilfield technical services have experienced pronounced margin compression, with reported gross margins falling from approximately 18.4% in FY2024 to an estimated 14.1% in H1 2025. Intense price competition from small and medium-sized enterprises has driven average contract prices down by an estimated 12-20% year-on-year in key provinces (Sichuan, Xinjiang, Bohai Rim). Domestic services revenue share of total company revenue declined from roughly 28% in 2023 to an estimated 20% by mid-2025 as overseas EPC and equipment sales surged. Management has signaled a strategic pivot away from low-margin domestic service contracts toward higher-margin international EPC projects and high-end equipment sales, reallocating capex and sales resources accordingly.

Traditional oily waste treatment in the domestic market has reached a maturation point. Jereh reports cumulative treatment of over 2.0 million tons of oily waste to date, yet growth in this sub-sector has slowed to a mid-single-digit percentage annually, well below the double-digit growth posted by the company's high-tech divisions (e.g., battery materials recycling). In 2024 the environmental and new energy division generated RMB 463 million in revenue; oily waste treatment represented a minority portion of that (estimated 12-18%, or ~RMB 55-83 million). Local environmental players with lower fixed costs and simpler business models have taken share in low-margin municipal and small-field contracts.

Legacy drilling rig components and basic handling systems are characterized by commoditization and low growth. Global incumbents such as Baker Hughes and SLB dominate high-volume traditional drilling equipment; Jereh's relative market share in these mature product lines is low (single-digit global share estimate). Market demand is shifting toward intelligent, automated and digitalized drilling solutions-areas where Jereh is reallocating R&D to preserve strategic relevance. Legacy mechanical components now primarily serve existing customer maintenance needs rather than serving as primary growth drivers; operating margins on these lines are estimated in the low teens or below.

Key tactical implications and management responses:

• Reallocate sales and R&D resources from low-margin domestic service contracts to international EPC and high-end equipment segments.
• De-emphasize oily waste treatment in favor of advanced recycling initiatives (battery materials, circular economy projects) that command higher margins and growth.
• Maintain legacy drilling product support to preserve customer relationships, but limit capital investment and inventory exposure.
• Pursue selective consolidation or divestiture of non-core, low-return domestic service assets to improve portfolio returns.
• Accelerate digitalization and "intelligent oilfield" offerings to migrate customers from commoditized components to higher-value integrated solutions.