In the second half of last year, when the stock market was rising steadily and market performance was strong, even impressive stock price performance did not easily attract investor attention. The main character of this article, China Aviation Oil (Singapore) (referred to as China Aviation Oil), may not be the center of attention, but the market's interest in it has indeed noticeably increased recently.
As investors gradually shifted their focus from the 30 constituents of the Straits Times Index in the Singapore stock market to other mainboard stocks, China Aviation Oil, listed on the Singapore Exchange mainboard, saw its stock price nearly double over the past year, with a current market capitalization of SGD 1.5 billion, estimated to rank 50th on the mainboard, surpassing Yanlord (SGD 1.4 billion) and Yangzijiang Financial Holding (SGD 1.2 billion).
Compared to other aerospace companies like SIA Engineering Company (SIAEC, market cap SGD 3.9 billion) and SATS (SGD 5.8 billion), China Aviation Oil still shows a significant gap in scale. However, this has not hindered its re-entry into the sights of some analysts, reflecting a return of market interest.
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The parent company of China Aviation Oil is China National Aviation Fuel Group Corporation (CNAF). The parent company exclusively supplies aviation fuel in China, allowing China Aviation Oil to import aviation fuel into the Chinese market, which provides a solid demand foundation.
<h3>Global Air Passenger Volume Continues to Recover, China Aviation Oil Benefits</h3>
Analysts Chen Kaijie and Zhong Mingcheng from UOB Kay Hian released the first research report on China Aviation Oil in mid-January this year, stating that China Aviation Oil is the largest physical trader of aviation fuel in Asia and is expected to be a major beneficiary of the ongoing recovery in global air passenger volume.
The report also mentioned that China Aviation Oil is not only the largest importer of aviation fuel in China but also a key supplier to the rapidly expanding Chinese aviation industry, playing an important role in the Chinese civil aviation market. The two analysts believe that the strong growth in travel demand will drive an increase in transaction volume for China Aviation Oil and further enhance the profit contribution from its affiliated companies.
China Aviation Oil holds a 33% stake in Shanghai Pudong International Airport Aviation Fuel Company (referred to as Pudong Aviation Fuel), which is the sole supplier of aviation fuel at Shanghai Pudong International Airport (referred to as Pudong Airport). As one of the busiest aviation hubs in Asia, the flight volume and passenger performance at Pudong Airport are crucial to Pudong Aviation Fuel's fuel sales and profit contributions.
With the continued recovery of international air travel, Pudong Aviation Fuel's fuel sales and profitability are expected to further improve, bringing more substantial investment returns to China Aviation Oil.
China Aviation Oil's emphasis on developing Sustainable Aviation Fuel (SAF) business has also been recognized by analysts. Although sustainable aviation fuel currently accounts for only a single-digit percentage of the company's total transaction volume, its profit margins are several times higher than those of traditional aviation fuel
It is therefore expanding this business to strengthen profitability.
Citi Group research analyst Cen Yingyang said in an interview with Lianhe Zaobao that sustainable aviation fuel &#34;is a reliable long-term profit driver.&#34; Nevertheless, the current penetration rate of sustainable aviation fuel is still below 1% of global aviation fuel consumption. He believes that sustainable aviation fuel is more likely to be a medium-term development trend in the next three to five years, rather than a core profit driver in 2026.
Chen Kaijie and Zhong Mingcheng stated in an interview: &#34;It is expected that driven by improved profit margins and strong profit contributions from affiliated companies, China Aviation Oil's profits are expected to achieve year-on-year growth of 7.3% and 14.3% in 2025 and 2026, respectively.&#34;
Phillip Securities research analyst Hashim Osman Bin Jamsheed pointed out that the European Union will mandate that all departing flights (including non-EU airlines) use 2% sustainable aviation fuel by 2025, with this ratio expected to increase to 70% by 2050. This will immediately create market demand, and China Aviation Oil is expected to benefit from it.
<h3>Stock Price Soars, Exceeding Most Analysts' Target Price Levels</h3>
However, China Aviation Oil's stock price has soared significantly in recent times and is currently above the target price levels set by most analysts. Meanwhile, two pieces of news circulated in the market last November, one of which has been confirmed: the merger plan between Sinopec (China Petroleum &amp; Chemical Corporation) and China Aviation Oil's parent company, China National Aviation Fuel Group, has been approved by the Chinese government, and China Aviation Oil disclosed relevant progress on January 9.
As for the other rumor, it is that Sinopec may acquire the 20% stake in China Aviation Oil held by BP, but there has been no further clarification on this matter.
<h4>Further Reading</h4>
China Aviation Oil's parent company will implement a restructuring with Sinopec

 Experts: Airline stocks face selling pressure, cautious outlook for the next two years


In terms of stock price and dividends, a report released by DBS in mid-January pointed out that since resuming its analysis of China Aviation Oil in October last year, the company's stock price has performed strongly. Looking ahead, whether the stock price can continue to rise will increasingly depend on the company's execution capabilities, and if the capital allocation strategy can be clearer and more defined, it may become a key turning point for driving valuation reassessment.
DBS believes that China Aviation Oil is currently reasonably valued (the stock price has reached the target price level of SGD 1.75), with a forward cash price-to-earnings ratio of 6.4 times, which is expected to provide some support for the stock price and limit downside potential. Nevertheless, DBS maintains its original target price.
Cen Yingyang told Lianhe Zaobao that China Aviation Oil's stock price is expected to significantly outperform the Straits Times Index in 2025, mainly due to improved earnings, favorable factors from the Equity Market Development Plan (EQDP), and the market's higher dividend payment expectations driven by the company's ample net cash.
He said, &#34;We currently maintain a buy rating with a target price of SGD 1.75. Any further upgrade in rating may depend on whether China Aviation Oil increases its dividend payout ratio to release more shareholder value. The main risk is that the company may choose to maintain the current dividend payout level.&#34;
Regarding the significant rise in stock price over the past six months, Chen Kaijie and Zhong Mingcheng believe that both market and company factors have jointly driven this trend.
<h3>Benefiting from Capital Rotation to the Singapore Market, Stock Price Upside Potential Remains Positive</h3>
From a market perspective, China Aviation Oil benefits from capital rotation to the Singapore market. Singapore is seen as a safe haven in response to rising geopolitical risks, and as funds under the Equity Market Development Plan gradually enter the market, the activity level of funds has significantly increased.
From a company perspective, China Aviation Oil's valuation still appears low compared to its peers, while its robust cash flow supports the company's continued growth. &#34;Even without considering market factors, we remain optimistic about the upside potential of China Aviation Oil's stock price.&#34;
They pointed out that China Aviation Oil's dividend payout ratio has remained around 30%, and given the strong cash position (USD 515.3 million in the first half of 2025), the payout ratio is expected to remain at similar levels or even higher. Earnings for the fiscal year 2025 may exceed expectations, leading to higher dividend distributions.
They predict that the target price for this stock is SGD 2.09, corresponding to a projected price-to-earnings ratio of 14.5 times for 2026. The current price-to-earnings ratio is about 12.1 times, still far below the industry average of 24.7 times.
Hashim Osman believes that China Aviation Oil's stock price performance outperforms the benchmark index, mainly due to the company's own fundamental factors, such as the increase in flight volumes at Shanghai Pudong International Airport leading to growth in fuel sales. The company's dividend payout ratio is 30%, and with net cash exceeding 500 million, there is room to increase dividends.
Regarding what the merger with Sinopec means for China Aviation Oil, Cen Yingyang believes that operationally, China Aviation Oil can benefit from closer integration with Sinopec's refining and export systems, which will enhance supply reliability, achieve economies of scale, and ensure sustainable aviation fuel capacity. Although this merger is not expected to have any immediate direct impact on China Aviation Oil's daily operations, it is believed that the merger will strengthen its long-term position as a trading platform for international aviation fuel in China
Hashim Osman also stated that China Aviation can directly use sustainable aviation fuel produced by Sinopec, thereby reducing operating costs and the procurement costs of such fuel.
Regarding the equity held by BP, Cen Yingyang said: &#34;We believe that Sinopec may seek to acquire the 20% stake in China Aviation held by BP, especially in the context of BP adopting a more prudent capital management strategy and continuing to divest non-core assets. In addition, Sinopec and BP have a competitive relationship in refining, trading, and downstream distribution, and their joint ownership of shares in China Aviation may create conflicts of interest, which also increases the likelihood of Sinopec seeking full control.&#34;
China Aviation will announce its performance for the second half of 2025 and the full year on February 26, and it remains to be seen whether the market will re-rate it as a result

China Aviation Oil's stock price has nearly doubled in the past year, with a market capitalization reaching 1.5 billion yuan, ranking 50th on the Singapore Exchange's main board, surpassing Yanlord Land Group and Yangtze River Financial Holdings. Although there is still a gap compared to SIA Engineering and Xiamen Airlines Group, market attention towards it has increased, reflecting a return of investor interest. Its parent company, China National Aviation Fuel Group, exclusively supplies aviation fuel in China, providing a solid demand foundation for China Aviation Oil

China Aviation's stock price nearly doubled, market attention rises | Lianhe Zaobao