China Aviation Oil (CAO)

China Aviation Oil (CAO): Group announced contracts to supply jet fuel to Air China in London, Madrid and Los Angeles. Contracts have aggregate contractual volume of approx 120,000 metric tonnes, on an 18-mth term, commencing from 1 Apr 2013. Aviation fuel supply volume for 2012 was 750,000 metric tonnes, the new contracts on an annualised basis, provides 80,000 tonnes (10.7% increase) on volumes for FY13. With the 3 major Chinese airlines increasing their Available-Seat-Kilometres in recent years, together with CAO's parent company, China National Aviation Fuel Group Corp having established strategic alliances with the Chinese airlines which enables CAO to be the preferred supplier of jet fuel for the airlines outside China, places CAO in a structurally positive position. CAO currently trades at 9.1x trailing P/E, on an estimated EPS growth of 19%; CAO has a 5-year historical average P/E of 12.3x, and -1 std. dev. of 8.3x;