SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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SGX’s 20 Biggest China-Related Enterprises Returned 39.8% in YTD

20 Largest China Plays Returned 27% in the YTD

Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

China Aviation Oil (Singapore) / Equity Bottom-Up

<p>China Aviation Oil (Singapore) Corporation (CAO) has made good progress in the first half of the year, benefiting from favourable volume growth offset to a degree by FX and the non-recurrence of positive stock valuation. Trading conditions look more challenging in the second half with the jet fuel market having moved into backwardation since early July. We are thus taking a much more cautious view on the second half and have reduced our forecasts accordingly. It is important to recognise that cash generation has been far stronger than expected and should remain favourable in H2 as inventory is released and the main associate dividend is received. Thus, our fair value actually increases to US$1.55 (S$2.11) per share from US$1.45 (S$2.04) as a result.</p>

China Aviation Oil (Singapore) Corporation (CAO) has made good progress in the first half of the year, benefiting from favourable volume growth offset to a degree by FX and the non-recurrence of positive stock valuation. Trading conditions look more challenging in the second half with the jet fuel market having moved into backwardation since early July. We are thus taking a much more cautious view on the second half and have reduced our forecasts accordingly. It is important to recognise that cash generation has been far stronger than expected and should remain favourable in H2 as inventory is released and the main associate dividend is received. Thus, our fair value actually increases to US$1.55 (S$2.11) per share from US$1.45 (S$2.04) as a result.

<p>As the sole licensed importer and supplier of jet fuel to China&rsquo;s civil aviation industry, China Aviation Oil (Singapore) Corporation (CAO) is a direct play on the rapidly rising demand for air travel in China, augmented by both international and product expansion. While a healthy dividend income from a joint venture at Shanghai&rsquo;s rapidly expanding Pudong Airport provides the bulk of earnings, the growing trading and supply of oil is supportive of our 14% EPS CAGR over the next two years. Our cash and peer-based fair value of US$1.45 (S$2.04) suggests potential for investors.</p>

As the sole licensed importer and supplier of jet fuel to China&rsquo;s civil aviation industry, China Aviation Oil (Singapore) Corporation (CAO) is a direct play on the rapidly rising demand for air travel in China, augmented by both international and product expansion. While a healthy dividend income from a joint venture at Shanghai&rsquo;s rapidly expanding Pudong Airport provides the bulk of earnings, the growing trading and supply of oil is supportive of our 14% EPS CAGR over the next two years. Our cash and peer-based fair value of US$1.45 (S$2.04) suggests potential for investors.

Singapore

China Aviation Oil (Singapore) Corporation Ltd is the largest physical jet fuel trader in the Asia Pacific region and a key supplier of imported jet fuel to China's civil aviation industry. The company also engages in the trading of other oil products and investments in oil-related assets. It was incorporated in Singapore on May 26, 1993.

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China Aviation Oil (Singapore) (CAO SP)

20 Largest China Plays Returned 27% in the YTD

Singapore Exchange Ltd (SGX)

FTSE ST China Index up 18% in 2017 YTD

Singapore Exchange Ltd (SGX)

Progress in a backward market

China Aviation Oil (Singapore) Corporation (CAO) has made good progress in the first half of the year, benefiting from favourable volume growth...

Edison Investment Research

Fuelling growing aviation demand

As the sole licensed importer and supplier of jet fuel to China’s civil aviation industry, China Aviation Oil (Singapore) Corporation (CAO) is a...

Edison Investment Research

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