Broker Name: DBS
Date of Report: Not explicitly stated (inferred to be 2024 or early 2025 based on context and FY25 results)
Excerpt from DBS report.
Report Summary
- China Aviation Oil (CAO) reported a strong FY25 net profit of USD110.6mn, beating expectations by 14%, driven by higher gross profit per ton amid favorable arbitrage conditions and contributions from SAF (Sustainable Aviation Fuel).
- Despite some headwinds from backwardation and higher airfares, CAO benefits from wider cross-regional spreads and market volatility, supporting trading margins.
- Dividend payouts remain muted due to ongoing restructuring at the parent level, but strong net cash and earnings offer scope for higher future returns once constraints are lifted.
- Management is focused on disciplined M&A aligned with core supply chain infrastructure and SAF, with potential investments expected in Southeast Asia and Europe.
- DBS maintains a BUY rating, raising the target price to SGD2.50, and sees attractive risk/reward with potential upside from better trading economics and future dividend increases.
Above is an excerpt from a report by DBS. Clients of DBS can be the first to access the full report from the DBS website: https://www.dbs.com
