CAO declines; valuation seen as demanding (POEMS)

China Aviation Oil (Singapore) Corp (CAO) turned weaker after strong gains yesterday with analysts now viewing the stock's valuations as demanding, dealers said. In late morning trade, CAO was down 0.15 sgd or 9.15 pct to 1.49 on volume of 37.09 mln shares. CAO rose to as high as 1.850 sgd after it resumed trade yesterday, following more than a year of suspension. Investors welcomed the introduction of new investors, including BP and Temasek, under a restructuring program that was put in place after the firm nearly collapsed having racked up around 550 mln usd in derivatives trading losses. "At the current price, the stock is trading at a demanding 31 times price earnings ratio, way above BP, Temasek and (CAO) creditors's entry price of 0. 515 sgd," Phillip Securities senior dealing director Gabriel Yap said in a note. Yap also noted the firm is now trading at more than 10 times net While prospects for CAO remain bright given its dominance of the jet fuel supply market in China, analysts are advising investors to be cautious given the rich valuations.