Will CAO Singapore be able to capitalise on China’s aviation boom?

It’s riding on the success of Shanghai Disneyland.

The aviation firm is expected to sustain high single-digit growth as it rides the tailwind of China’s aggressive aviation efforts.

According to a report by UOB Kay Hian, China Aviation Oil Singapore’s stellar set of 2Q results is an indication that the firm is the right proxy for Singapore investors to tap China’s aviation industry boom.

“Going forward, we expect CAO to continue to enjoy high single-digit growth for its jet fuel distribution business which is underpinned by the Chinese government’s push in the general aviation industry while profit contribution from its SPIA associate continues to grow,” UOB Kay Hian noted.

Meanwhile, the success of Shanghai Disneyland, as well as the increasing importance of Shanghai as a global business hub, means that SPIA will continue to generate strong recurring income for the group, with growth rates expected to increase to an even more impressive 12%.

“We further note the potential for future growth as the Shanghai airport builds a new terminal that will allow it to become one of the world’s top three busiest airports in 2019,” UOB Kay Hian noted.