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Thursday, April 20, 2017

China Aviation Oil (CAO SP SP) | Buy SGD 1.63 as event catalysts unfold

My view:

S'pore-Event-Driven-pick | China Aviation Oil (CAO SP SP) Px/Tgt SGD 1.63 /2.26

Theme:                Buy-sgd1.63-as-event-catalysts-unfold
1.        UOBKH has been having CONVICTION CALLS on CAO SP as follows:

        a.        BUY:                        Apr 2017                sgd1.63
        b.        Look to BUY:                Jan 2017                <sgd1.30  
        c.        Put-on-BUY-radar:        Oct 2016                <sgd1.30  
        d.        Take-Profit:                Aug 2016                sgd 1.50
        e.        Conviction Buy:         May 2016                sgd 0.99

2.        CAO SP event-catalyst are as follows:

        a.        Apr 2017:        UOBKH upgraded target SGD2.26 is at 2017 PE of 14x (vs peers at 18x)
        b.        Apr 2017:        Excellent 1Q17 results
        c.        2Q 2017:        Delay in possible utilisation of its USD220m cash for M&A (likely to take a stake in a European airport & do a similiar ops as Shanghai Pudong)

3.        UOB Kay Hian Research maintain BUY with target price raised to S$2.26 based on 14.4x 2017F PE, pegged at a 20% discount to peers' average PE of 18x. Catalysts include potential for future growth as the Shanghai airport builds a new terminal (aiming to be amongst the world's top three busiest airports in 2019 and the general China's civil aviation boom.

UOB Kay Hian Research issued a report dated today on the above topic. Please contact us for the full research analyst report.

Thanks & Regards
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