China Aviation Oil (Singapore)

SP: G92

SGD1091.4m market cap

SGD1.26 last close

China Aviation Oil (Singapore) Corporation (CAO) is the largest physical jet fuel supplier and trader in Asia. It holds the sole import licence for bonded jet fuel into China, and has nascent businesses in the US and Europe. Of its five associates, the most important is SPIA, which supplies all jet fuel to Shanghai Pudong Airport.

Investment summary

CAO operates as a physical jet fuel supplier as well as trader, while a healthy dividend income from the fuel supply JV at Shanghai’s rapidly expanding Pudong Airport provides the bulk of earnings and cash. Strong air transport growth in China continues to support modest growth in FY19, but US/China trade tension is a constraint as reflected in a flat H119 performance. Our forecasts reflect a slower growth trajectory through FY20. The healthy balance sheet positions the group to extend its global supply chain infrastructure. Q3 results are due around 1 November.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 16268.0 23.9 88.7 10.0 9.2 35.1
2018A 20612.0 30.9 98.2 11.1 8.3 3.7
2019E 20265.0 40.1 98.4 11.1 8.3 6.8
2020E 21385.0 47.1 103.9 11.7 7.8 6.8
Industry outlook

As the sole licensed importer and supplier of jet fuel to China’s civil aviation industry, CAO is a direct play on the rapidly rising demand for air travel in China, with growth augmented by both international and product expansion. Air transport is widely acknowledged to be an industry in a period of structural growth. International travel from China is increasing four times faster than the global average, so CAO is exposed to a sweet spot in the market.

Last updated on 14/11/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (US$m) 433.8
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 5.9 9.6 0.8
Relative* 1.8 6.4 (5.0)
52-week high/low S$1.5/S$1.0
*% relative to local index
Key management
Meng Fanqiu CEO
Wang Chunyan CFO
Elaine Ange Head of IR
Jean Teo COO
Lilian Low Investor Relations Manager