Broker Name: CGS International
Date of Report: February 20, 2026
Excerpt from CGS International report.
Report Summary
- China Aviation Oil (CAO) stands to benefit from the announced merger of its parent, China National Aviation Fuel Group (CNAF), with Sinopec, potentially unlocking up to 40% upside to CAO’s current valuation.
- The bull case envisions CAO becoming the central international trading platform for aviation fuel and crude oil, potentially multiplying trading volumes and operational leverage; the bear case risks CAO losing autonomy and earnings relevance if absorbed into Unipec.
- CGS International raises its target price for CAO to S\$2.63 using a sum-of-parts (SOP) valuation, reflecting both core business and associate value, with further upside in a full re-rating scenario and downside cushioned by strong net cash.
- Operational performance is expected to be robust in 2H25, driven by strong outbound air traffic and resilient margins, with net profit forecasts of US\$102m for FY25, though FY26 growth may be flat due to China–Japan tensions.
- A potential general offer (GO) triggered by the merger could lead to a fair value reassessment of CAO’s assets, unlocking additional embedded value for shareholders.
- ESG efforts are ongoing, with CAO targeting a 30% reduction in Scopes 1 and 2 emissions by 2030 and net-zero by 2050, while expanding its sustainable aviation fuel (SAF) business.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com/
