China Aviation Oil (Singapore) (G92)

Business description

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.

Y/E Dec Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (fd) (c) P/E (x) P/CF (x)
2016A 11703.0 30.2 89.9 10.4 11.9 28.2
2017A 16268.0 24.1 88.0 9.9 12.5 47.3
2018E 18406.0 26.8 96.0 10.8 11.5 15.6
2019E 20750.0 31.2 105.0 11.8 10.5 13.6

Last updated on 29/03/2018

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. H2 gross margin of the core trading operation was affected by backwardation in product markets and supply disruptions. More positively, there was a stronger contribution from SPIA and other associates. With adverse trading conditions persisting early in 2018, management’s strategy to reduce volatility is being tested. The key growth drivers of rising Chinese air traffic and an expanding geographical footprint continue to increase trading volumes and associates cash dividends.

Last updated on 06/04/2018

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 06/04/2018

Key management

Meng Fanqiu, CEO
Wang Chunyan, CFO
Jean Teo, COO
Elaine Ange, Head of IR
Lilian Low, Investor Relations Manager

Company address

8 Temasek Boulevard
#31-02 Suntec Tower Three
Singapore
+65 6334 8979
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