Brokers' take

China Aviation Oil Singapore Corporation | Buy May 10 close: S$1.58 Target price: S$2.13 UOB Kay Hian, May 10

China Aviation Oil (CAO)'s first-quarter earnings beat expectations, with net profit jumping 13.9 per cent year on year. While oil prices continue to trend upwards, the market remains extremely volatile with geopolitical factors such as the United States pulling out of the Iran deal. We are cautiously optimistic for CAO in 2018 but continue to assume lower gains for trading and optimisation activities. We expect the SPIA associate to continue to generate strong recurring income for the group with long-term growth rates around 7 per cent, in yuan terms, amid strong fundamentals and a China civil aviation boom.

Maintain "buy" and a target price of S$2.13, pegged at 13.5 times the FY2018F price-to-equity ratio.