Dear readers,

Happy New Year! Hope your new year has been great. Market has been extremely interesting for the past couple of months. Recently, China Aviation (“CAO”) caught my attention with its bullish chart and looks interesting on a risk to reward aspect. CAO closed at $1.30 last Fri. Day range was $1.29-1.32.

Read on for more.

Why did CAO catch my attention?

a) Average analyst target price $1.70

With reference to Figure 1 below, average analyst target is around $1.70. Together with an estimated dividend yield of around 3.6%, CAO offers a total potential return of around 34%.

Figure 1: CAO total potential return 34%!

Source: Bloomberg 3 Jan 2020

b) Below average valuations

CAO trades at 1.0x P/BV and 8.4x PE. This is lower than its average 2Y, 5Y and 10Y valuations. For example, 2Y P/BV and PE are at 1.2x and 9.6x respectively. 5Y P/BV