Here's why a stellar Q3 result is expected from China Aviation Oil

Outbound tourism in China during Golden Week boomed 12%.

Despite the slowdown in local economy, mainboard-listed China Aviation Oil (CAO) Singapore Corp. can look forward to a robust 3Q16 result as the Golden Week made way for the surge in outbound tourism.

According to UOB KayHian analyst Edison Cheng, international travel in China continued to show strength, with outbound tourism growing 12% during the Golden Week this year. This is an uptick from last year's 10.7% expansion in outbound tourism.

"Similarly, according to the Civil Aviation Administration of China (CAAC), combined passenger traffic for both domestic and international flights increased 11.6% yoy during the Golden Week," Chen said.

The analyst noted that CAO's management is confident of its 3Q16 results. However, the group might not be as cheerful in 4Q16 as December is not a festive season in China.

"However, management noted that as CAO has diversified further into the US and European markets, this seasonal weakness could gradually fade away over time," Chen underscored.

To recall, CAO’s net profit jumped 48.6% to $47.8 million for the six months ending in June 30 this year.

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