China Aviation Oil - Phillip Securities 2025-03-07: No Money For You, Downgrade To NEUTRAL.

• China Aviation Oil (SGX:G92)'s FY24/2H24 PATMI surged by 33.8% y-o-y/ decreased by 8.07% y-o-y to US$78.1/35.8mil which met our forecast, forming 100% of FY24e estimates.
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• Revenue for FY24/2H24 rose 7.6% y-o-y/ slid by 2% y-o-y to US$15.5/ 8.0bn, which is in line with expectations. The drop in 2H24 was attributed to lower trading volume of jet fuel. FY24/2H24 gross profit declined by 17.3% /55.73% y-o-y due to lower gains from jet fuel supply and trading of other oil products.
• China Aviation Oil declared a final dividend of 3.72 Singapore cents, representing a 30% payout ratio, with no special dividend.

The Positives

SPIA continues to shine.

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• We expect SPIA’s contribution to continue increasing in FY25e, as profit from associates remains at ~70% of FY19 levels, while international visitor arrivals reached 84% of pre-pandemic levels by Dec24. This discrepancy was attributed to lower jet fuel prices in FY24.
• Looking ahead, we expect more substantial contributions from SPIA as international air traffic is projected to recover to ~90% of pre-COVID levels in 2025. However, lower jet fuel prices are likely to persist into FY25e, given their strong positive correlation with oil prices.
• The market anticipates downward pressure on oil prices due to Trump’s recent policies, such as easing Russia-Ukraine tensions, so the magnitude of profit growth may not be proportionate to the increase in refueling volume.

The Negative

Lower margin from trading business.

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Liu Miao Miao Phillip Securities Research | https://www.poems.com.sg/ 2025-03-07 SGinvestors.io

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