China Aviation Oil > Neutral (downgraded) RHB Research Institute, Nov 2 Nov 2 close: S$1.34 Target price: S$1.50

CAO's Q3 profit of US$18.9 million was 17 per cent below our estimate and marked a decrease of 12 per cent year-on-year (yoy) and 35 per cent quarter-on-quarter (qoq). This decline was driven by lower volumes for middle distillates, trading of other oil products, jet fuel supply volume at SPIA and unfavourable forex movements.

CAO reported a 156 per cent yoy increase in gross profit to US$11.1 million, on a sharp rise in profits from trading of other oil products. However, this increase in trading profits came with a higher working capital requirement and, hence, higher financing costs.