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.
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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Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
