"This should support jet fuel volume growth and profits at Shanghai Pudong International Airport," says Lim, referring to CAO's main operating base.
"Higher oil price volatility might have also presented trading and arbitrage opportunities for the company, in our view," she adds.
Ahead of CAO's 1HFY2025 results on Aug 14, Lim has raised her growth assumptions for this company. She has also raised her target PE valuation multiple from 8.8x to 11x, just a shade below CAO's five-year average.
Lim believes that CAO, which is in a net cash position of around US$500 million, is also one of the small and mid-cap names that might benefit from the $5 billion market rejuvenation fund.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
"A key catalyst to watch out for would be management’s commitment to a higher dividend payout ratio, especially amidst China’s ongoing reform of state-owned enterprises (SOEs) to boost shareholder returns and capital efficiency," she adds.
CAO shares changed hands at $1.13 as at 1.57 pm, down 1.74% for the day but up 22.83% year to date.
