Yahoo Finance Is China Aviation Oil (Singapore) Corporation Ltd’s (SGX:G92) Balance Sheet A Threat To Its Future?
China Aviation Oil (Singapore) Corporation Ltd (SGX:G92) is a small-cap stock with a market capitalization of S$1.32b. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Companies operating in the Oil and Gas industry, even ones that are profitable, are inclined towards being higher risk. Evaluating financial health as part of your investment thesis is essential. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Though, I know these factors are very high-level, so I suggest you dig deeper yourself into G92 here.
How much cash does G92 generate through its operations?
G92 has built up its total debt levels in the last twelve months, from S$100.00m to S$0 . With this growth in debt, G92’s cash and short-term investments stands at S$319.09m , ready to deploy into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can take a look at some of G92’s operating efficiency ratios such as ROA here.
Does G92’s liquid assets cover its short-term commitments?
Looking at G92’s most recent S$1.18b liabilities, it seems that the business has been able to meet these commitments with a current assets level of S$1.58b, leading to a 1.34x current account ratio. Usually, for Oil and Gas companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.
Can G92 service its debt comfortably?
With a debt-to-equity ratio of 3.31%, G92’s debt level is relatively low. G92 is not taking on too much debt commitment, which may be constraining for future growth.
Next Steps:
G92’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure G92 has company-specific issues impacting its capital structure decisions. I recommend you continue to research China Aviation Oil (Singapore) to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for G92’s future growth? Take a look at our free research report of analyst consensus for G92’s outlook.
Valuation: What is G92 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether G92 is currently mispriced by the market.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
