China Aviation Oil (Singapore): Navigating Unprofitability and Seeking Stability

Over the past five years, investors in China Aviation Oil (Singapore) (SGX:G92) have faced a challenging landscape marked by stagnant stock performance, fluctuating dividends, and operational headwinds. While the company has shown signs of recovery in recent quarters, its journey since 2020 underscores the difficulties of navigating volatile oil markets and global supply chain disruptions. Let’s dissect the data to understand where investors stand today.

Stock Performance: A Decade-Long Stagnation

The stock price of China Aviation Oil (SGX:G92) has been a source of frustration for investors. From January 2020 to April 2025, the stock traded within a narrow range of S$0.74 to S$1.28, closing at S$0.83 in April 2024—a level barely above its 2020 lows. Even during periods of fleeting optimism, such as the 2021 price target hike to S$1.28, gains were short-lived. By late 2024, the stock had only rebounded to S$0.97, far below its 2020 high.

This lackluster performance contrasts with the broader SGX Oil & Gas sector, which underperformed but outpaced the company’s returns. Investors seeking capital appreciation would have found little to celebrate.

Financial Resilience Amid Struggles

While the stock price tells a grim story, the company’s financials reveal a more nuanced picture:
- Earnings Per Share (EPS): After dipping to US$0.065 in 2020 (down from US$0.12 in 2019), EPS improved to US$0.091 by late 2024 (trailing-twelve-month basis), driven by cost discipline and stronger margins in jet fuel and other oil products.
- Revenue: 2023 marked a turning point, with full-year revenue surpassing forecasts, thanks to robust demand for aviation fuels and strategic investments in oil-related assets.
- Dividends: Post-2020, dividends were slashed from S$0.026 to S$0.016 amid operational challenges. However, payouts stabilized in 2024, with an announced S$0.037 dividend (ex-date May 2025), signaling renewed confidence.

Operational Strengths and Risks

The company’s core business—supplying jet fuel to major Chinese airports like Beijing Capital and Shanghai Pudong—remains its anchor. Its three segments (Middle Distillates, Other Oil Products, and oil-related investments) collectively weathered the pandemic and post-pandemic turbulence.

Yet risks persist:
- Legal Proceedings: Ongoing litigation with Banque de Commerce et de Placements SA (disclosed in June / 2024) could introduce uncertainty, though no material financial impact has been reported.
- Dividend Volatility: While 2024’s payout is a positive sign, the 30% payout ratio indicates cautious management, prioritizing liquidity over shareholder returns.

Valuation and Investment Considerations

Today, China Aviation Oil trades at a P/E ratio of 7.0x, undervalued relative to peers, and boasts a 0% debt/equity ratio, reflecting a robust balance sheet. The Snowflake Score of 5/6 for valuation and a perfect 6/6 for financial health suggest underlying stability. However, the 4.3% dividend yield—though attractive—remains below pre-pandemic levels.

Conclusion: A Turnaround in Progress?

For the five-year period ending 2024, investors in China Aviation Oil (Singapore) have indeed faced unprofitability, with stagnant stock prices and reduced dividends. However, recent data paints a cautiously optimistic outlook:
- EPS Growth: The trailing-twelve-month EPS of US$0.091 (up from US$0.065 in 2020) signals operational improvement.
- Market Position: Its dominance in aviation fuel—a critical sector as air travel rebounds—positions it to capitalize on rising demand.
- Valuation: At 7.0x P/E, the stock appears undervalued, offering a potential entry point for long-term investors.

Nonetheless, risks like geopolitical oil market volatility and unresolved legal matters linger. Investors should weigh these against the company’s strengthened fundamentals. For now, China Aviation Oil appears to be stabilizing rather than soaring, making it a defensive play for portfolios seeking exposure to Asia’s aviation recovery—but not a short-term profit generator.