Lim Siew Khee, an analyst from CGS-CIMB, reiterated the Buy rating on China Aviation Oil (Singapore). The associated price target is S$1.45.
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Lim Siew Khee has given his Buy rating due to a combination of factors that highlight the potential for growth and value in China Aviation Oil (Singapore). The company is currently trading at an attractive valuation, approximately 8.5 times its forecasted earnings for 2026, which is below its historical average. This presents a compelling entry point for investors. The company’s performance in the first half of 2025 exceeded expectations, driven by a significant increase in trading volume and improved margins, particularly from sustainable aviation fuel trading.
Looking forward, Lim anticipates continued recovery in China’s aviation sector, with international flights nearing pre-pandemic levels. This recovery, coupled with favorable travel policies, is expected to boost earnings momentum in the second half of 2025. Additionally, the European Union’s mandate for sustainable aviation fuel usage could further enhance margins, although potential oil price weakness may offset some of these gains. Overall, the positive outlook for earnings recovery, combined with a decent yield and inexpensive valuation, supports the Buy rating.
CAOLF’s price has also changed moderately for the past six months – from $0.690 to $0.942, which is a 36.52% increase.