Broker: OCBC Investment Research
Date of Report: 19 August 2025
China Aviation Oil (Singapore): Jet Fuel Giant Powers Ahead in Asia Pacific with Earnings Beat and Robust Growth Outlook
Overview: Leading the Skies in Jet Fuel Trading
China Aviation Oil (Singapore) Corporation Ltd (CAO) stands as the largest physical jet fuel trader in the Asia Pacific region. As a vital supplier to the civil aviation industry of China, CAO operates through its wholly owned subsidiaries, delivering jet fuel to 36 international airports and 91 airlines across over 20 countries including Asia Pacific, North America, Europe, and the Middle East. The company also maintains investments in synergistic oil-related businesses such as storage, pipelines, and airport refuelling services. CAO’s parent company, China National Aviation Fuel Group Limited, is China’s largest aviation transportation logistics provider.
Key Investment Highlights
- Robust 1H25 Results: Revenue grew by 13.6% year-on-year to USD 8.6 billion, while net income surged 18.4% to USD 50 million, both outperforming forecasts.
- Margin Expansion: Supported by increased sustainable aviation fuel (SAF) trading in Europe, contributing to optimization gains despite a low single-digit share of trading volume.
- Fair Value Raised: The fair value estimate is increased to SGD 1.50 per share, with a reiterated BUY rating. CAO’s net cash position of USD 515 million as at 30 June 2025 provides firepower for potential acquisitions or enhanced shareholder returns.
- Strategic Positioning: CAO is well-positioned to benefit from long-term growth in jet fuel demand, leveraging its entrenched market leadership, China’s growing middle class, and increasing affluence in the region.
Financial Performance: 1H25 Results and Five-Year Trends
| Metric |
1H25 |
1H24 |
YoY Change (%) |
| Revenue (USD m) |
8,560.5 |
7,535.5 |
+13.6% |
| Gross Profit (USD m) |
30.4 |
24.2 |
+25.6% |
| Net Profit (USD m) |
50.0 |
42.3 |
+18.4% |
| EPS (US cents) |
5.8 |
4.9 |
+18.1% |
| NAV (US cents) |
118.2 |
114.7 |
+3.0% |
Summary of Annual Financials
| Year |
Revenue (USD m) |
Gross Profit (USD m) |
Net Profit (USD m) |
EPS (US cents) |
DPS (S cents) |
| FY2020 |
10,517.0 |
45.9 |
56.2 |
0.1 |
— |
| FY2021 |
17,636.7 |
30.7 |
40.4 |
0.0 |
— |
| FY2022 |
16,464.1 |
35.4 |
33.5 |
0.0 |
— |
| FY2023 |
14,429.6 |
50.6 |
58.9 |
0.1 |
— |
| FY2024 |
15,518.5 |
41.9 |
78.4 |
0.1 |
— |
Revenue Breakdown and Geographical Reach
- Middle Distillates: 68.9% of FY24 revenue
- Other Oil Products: 31.1% of FY24 revenue
- China: 67.2% revenue share
- USA: 6.1% revenue share
- Europe: 6.4% revenue share
- Others: 20.3% revenue share
Key Ratios and Profitability
| Ratio |
FY24 |
FY25E |
FY26E |
| Revenue Growth (%) |
7.5 |
11.4 |
5.7 |
| Gross Profit Margin (%) |
0.3 |
0.3 |
0.3 |
| Net Income Margin (%) |
0.5 |
0.5 |
0.5 |
| Dividend Yield (%) |
3.1 |
3.7 |
4.0 |
Valuation and Peer Comparison
CAO’s valuation metrics compare favorably against industry peers, indicating a strong value proposition for investors.
| Company |
P/E FY25E |
P/E FY26E |
P/B FY25E |
P/B FY26E |
EV/EBITDA FY25E |
EV/EBITDA FY26E |
Dividend Yield FY25E (%) |
Dividend Yield FY26E (%) |
ROE FY25E (%) |
ROE FY26E (%) |
| China Aviation Oil (Singapore) |
9.5 |
8.6 |
0.8 |
0.7 |
8.5 |
7.8 |
3.3 |
3.5 |
8.6 |
8.8 |
| China Petroleum & Chemical Corp |
14.6 |
12.9 |
0.8 |
0.8 |
6.3 |
5.9 |
4.6 |
5.3 |
5.6 |
6.2 |
| Bangkok Aviation Fuel Services |
13.7 |
8.4 |
0.9 |
0.9 |
9.0 |
7.8 |
5.1 |
8.3 |
7.2 |
10.9 |
| Neste Oyj |
42.9 |
17.0 |
1.5 |
1.4 |
11.0 |
8.2 |
1.5 |
1.6 |
3.4 |
8.0 |
ESG & Corporate Conduct
- CAO exhibits strong corporate conduct, with best practices such as whistle-blower protection and anti-corruption training for all employees.
- There is room for improvement in emissions and physical risk management, given the nature of oil products trading.
Potential Catalysts and Risks
- Growth Catalysts:
- Faster-than-expected recovery in Chinese air travel.
- Accretive acquisitions utilizing CAO’s net cash position.
- Initiatives to enhance profitability and shareholder returns, such as higher dividend payout ratios.
- Investment Risks:
- Slower recovery in international flights due to demand or supply constraints.
- Geopolitical tensions and regulatory risks affecting cross-border trading and supply chains.
Shareholder Structure and Market Data
- Ticker: CNAO.SI / CAO SP
- Market Capitalization: USD 0.8 billion
- Shares Outstanding: 860 million
- Free Float: 28%
- Top Shareholder: China National Aviation Fuel Group (51.0%)
- Daily Turnover: SGD 1.0 million
Conclusion: Multi-Year Investment Story with Upside Potential
CAO’s entrenched market position, strong financial results, and significant cash reserves provide a solid foundation for sustained growth and shareholder value creation. The company’s exposure to China’s burgeoning aviation industry, margin improvement through SAF trading, and prudent risk management make it a compelling choice for investors seeking medium-term returns. Accretive acquisitions or enhanced dividends could serve as additional catalysts for stock re-rating.
Broker Ratings Methodology
- BUY rating: Indicates expected returns (excluding dividends) above 10% for large caps; above 30% for small caps.
- HOLD rating: Total expected returns within +10%/-5% (large caps); +/-30% (small caps).
- SELL rating: Returns below -5% (large caps); below -30% (small caps).
