Why SIA Cargo's exceptional performance could be short-lived

It will be negatively impacted by tepid world trade.

The past quarter was exceptional for SIA Cargo, as its operating profit reached its best third quarter in nine years at $53m. This came as SIA Group revenue declined 2.5% to $3.84b on lower passenger flown revenue. But could this performance be short-lived?

According to OCBC Investment Research, SIA Cargo's yields were lifted by two things: an early Chinese New Year effect and the bankruptcy of Hanjin Shipping which led to the demand for airfreight.

"Hence, on the back of tepid world trade growth outlook, we do not expect the growth recorded by SIA Cargo in 3QFY17 to sustain over the next few quarters," OCBC said.

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