KGI Securities has reiterated its "buy" call and $1 target price for China Aviation Oil, citing how the supplier of jet fuel in China is set to enjoy growth from the current peak summer travel season.
The company's main business is to supply jet fuel to foreign and domestic airlines flying through China’s airports. It actively trades oil products such as fuel oil, gas oil, crude oil, and petrochemical products too.
According to KGI on July 19, there's a travel demand surge these couple of months, as graduating students go travelling with friends and families before they move to new schools in September.
KGI points out that the upcoming summer is the first long holiday season after China’s full-blown reopening, and tourism is expected to brace a pent-up demand from fresh graduates and their families. Overseas travelling is poised to further recover due to the pent-up demand, adds KGI.
The brokerage is also noting "promising recovery" in aircraft movement at Shanghai Pudong International Airport, CAO's main base.
In June aircraft movement at the airport jumped by 327% y-o-y to 36,702 flights, June passenger throughput jumped by 2,854.9% y-o-y to 4.77 million and freight throughput in the same month was up slightly by 4.3% y-o-y to 276,700 tonnes.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents
CAO shares, as at the noon break, is down 2.17% to 90 cents.
