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When China Aviation Oil (Singapore) Corporation Ltd (SGX:G92) announced its most recent earnings (30 September 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how China Aviation Oil (Singapore) performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see G92 has performed. See our latest analysis for China Aviation Oil (Singapore)
Did G92’s recent earnings growth beat the long-term trend and the industry?
I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For China Aviation Oil (Singapore), its latest trailing-twelve-month earnings is US$89.22M, which, relative to the prior year’s figure, has grown by a relatively muted 8.27%. Since these figures may be relatively short-term, I’ve determined an annualized five-year figure for China Aviation Oil (Singapore)’s net income, which stands at US$67.36M This shows that, generally, China Aviation Oil (Singapore) has been able to increasingly improve its earnings over the last few years as well.
What’s enabled this growth? Let’s see whether it is merely a result of an industry uplift, or if China Aviation Oil (Singapore) has seen some company-specific growth. In the past couple of years, China Aviation Oil (Singapore) increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Looking at growth from a sector-level, the SG oil and gas industry has been growing its average earnings by double-digit 32.19% in the prior twelve months, and 13.86% over the last five years. This shows that whatever uplift the industry is enjoying, China Aviation Oil (Singapore) has not been able to realize the gains unlike its average peer.
What does this mean?
China Aviation Oil (Singapore)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research China Aviation Oil (Singapore) to get a more holistic view of the stock by looking at: