SINGAPORE (July 7): RHB Securities is reiterating its “buy” call and target price on China Aviation Oil (CAO) at $1.25. This gives the counter a 4.5% 2020F yield and 23% upside from its $1.02 close on Friday (July 3), analyst Shekhar Jaiswal says in a July 6 note.

“We remain confident of China Aviation Oil’s return to earnings growth in 2021F,” he asserts.

“CAO’s 2021F P/E of 6.8x is below the range of multiples of its global jet fuel supplying peers, which are trading between 9.4x and 11.8x FY21F P/E. Accounting for its strong net cash position (c.60% of its market cap), CAO is trading at 2.7x 2021F P/E on an ex-cash basis”.

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