By Eric Yep
China Aviation Oil (Singapore) Corp. Ltd. (G92.SG) has a war
chest of up to $500 million to invest in oil-related infrastructure
assets, which it hopes can boost profits at its core fuel trading
business, the company's chief said.
The trading company's investments will be mainly in aviation
fuel stations at airports and storage facilities at oil trading
hubs, but may also include shipping and oil refining units, company
Chief Executive Meng Fanqui said Friday.
"Only when we have the logistical advantage can we support
trading," Mr. Meng said in an interview.
China Aviation Oil, the sole importer of aviation fuel into
China and Asia's largest aviation fuel trader, is attempting to
expand its business into other transportation fuels like diesel and
marine fuel to boost profits in a low-margin business
environment.
China Aviation Oil's plan to invest in logistics infrastructure
to boost profits is in line with the strategies of global commodity
trading majors that are expanding rapidly beyond their primary
trading roles.
"We've kept our dividend at two cents for the past few years
because we want to accumulate more cash and more profit for our
asset investments," Mr. Meng said.
China Aviation Oil already has stakes in oil-storage facilities
in China's southern Guangdong province and in South Korea, which
helped prop up its net profit in the first half of this year.
Write to Eric Yep at eric.yep@wsj.com
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