Broker: CGS International
Date of Report: June 18, 2025

Singapore Trendspotter: Key Market Insights and Technical Analysis of China Aviation Oil and SingTel

US Macro Update: Retail Slowdown Signals Caution Amid Tariff and Inflation Concerns

US retail sales declined for the second consecutive month in May, exposing signs of consumer caution in the face of ongoing tariffs and personal finance worries. Retail purchases, not adjusted for inflation, fell by 0.9%, the sharpest drop since early 2025. This follows a downwardly revised 0.1% decrease in April, marking the first back-to-back monthly declines since late 2023.

• Industrial production also dropped in May for the second time in three months, reflecting weak utility output and subdued manufacturing.
• Homebuilder confidence reached its lowest since 2022 as buyers hesitate.
• Seven out of 13 retail sales categories reported decreases, including building materials, gasoline, and autos, which had previously seen a surge as consumers moved to front-run tariffs.
• Spending at restaurants and bars saw its steepest fall since early 2023.

Despite tariffs not yet driving US inflation higher, overall consumer sentiment remains fragile as household finances continue to bear the brunt of inflation and elevated interest rates. Economists see “signs of caution” in current spending patterns, underlining ongoing risks to the US demand landscape.

SingTel: Asset Recycling Drives Dividend Potential, But Valuation Limits Upside

CGS International maintains a Hold rating on SingTel, with an updated RNAV-derived target price of S\$4.10, reflecting adjustments following the company’s fourth-quarter FY25 results. While SingTel’s asset recycling ambitions could unlock higher dividends, current valuations appear stretched.

• SingTel has raised its asset recycling target to S\$9 billion over the next 3-4 years, providing significant headroom for dividend increases.
• Dividend yields for FY26-28F are estimated to exceed 5%.
• SingTel trades at a CY26F P/E of 21.6x, more than one standard deviation above its post-2009 mean — suggesting limited upside unless there is significant asset value unlocking.

China Aviation Oil Singapore Corp Ltd: Bullish Reversal Gaining Traction

China Aviation Oil Singapore Corporation Limited (CAO) emerges as a technical buy with its price action indicating a strong bullish reversal. The company, a major jet fuel supplier to airlines operating in China, also engages in trading fuel oil, gas oil, crude oil, petrochemical products, and derivatives.

Technical Analysis Snapshot

• CAO’s breakout above overhead resistance and the formation of an inverted head and shoulders pattern signal a high-probability bullish reversal.
• The Ichimoku indicator reflects a clear bullish trend.
• MACD histogram is positive, with the signal line and MACD line having crossed at the bottom and trending upward toward zero.
• Stochastic Oscillator shows strong upward momentum, affirming the bullish bias.
• 23-period Rate of Change (ROC) has rebounded and remains positive.
• Directional Movement Index (DMI) confirms significant bullish strength.
• Volume is expanding healthily, supporting the price move.

Disclaimer and Regulatory Disclosures

All research and recommendations reflect the analyst’s independent view and are not direct solicitations to buy or sell securities. CGS International, its affiliates, and related corporations may hold positions in the securities mentioned and may engage in business or investment banking transactions with the subject companies.

Jurisdictional Disclosures

This research is intended for circulation among professional, institutional, or sophisticated investors as defined by the regulations in each applicable jurisdiction. It is not directed at or intended for retail investors or the general public in restricted markets.

CGS International’s Recommendation Framework

The total expected return combines the percentage difference between the target price and the current price, along with the forward net dividend yield, over a 12-month investment horizon.

Sector and Country Ratings

• Sector Ratings: Overweight (positive), Neutral, Underweight (negative) — based on market cap-weighted recommendations.
• Country Ratings: Overweight, Neutral, Underweight — based on relative positioning to benchmark weights.

Stock Ratings and Investment Banking Client Distribution (as of March 31, 2025)

A total of 551 companies were under coverage for the quarter ended March 31, 2025.

Conclusion: Market Volatility and Select Opportunities Ahead

As macroeconomic headwinds continue to shape global markets, investors are urged to remain vigilant. SingTel’s asset recycling potential offers attractive yields but may be constrained by high valuations. Meanwhile, China Aviation Oil Singapore Corp Ltd presents a compelling technical setup for those seeking upside momentum, supported by robust technical indicators and positive volume trends. Market participants should conduct their own due diligence and consider professional advice before making investment decisions.