Sydney Airport Pty Ltd (ASX: SYD) owns and operates the main domestic and international airport in Sydney. Sydney Airport provides aeronautical, retail, property, car rental and parking and ground transport services through their two main business units which are Aviation (Sydney Airport) and Leasing & Advertising Opportunities. Sydney Airport has a market capitalisation of $21 billion.
What are the key features of the HY21 result for Sydney Airport?
For HY21, Sydney Airport reported a loss after income tax expense of $97.4 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of $210.8 million (down 29.8% on HY20). This result reflects that the number of passengers for HY21 declined by 36.4% relative to HY20. International passengers declined by 91.0% while domestic passengers declined by 3.1%. Sydney Airport will pay no distribution for HY21.
What is the outlook for Sydney Airport?
The short term outlook for Sydney Airport is entirely dependent on the easing of COVID-19 restrictions. Sydney Airport noted that given the uncertainty that remains with respect to the recovery in 2021, no distribution guidance can be provided at this point in time. One positive is that domestic and international travel can be expected to return very quickly once the restrictions are removed. Another positive is that Sydney Airport has a very strong liquidity position, comprising $0.5 billion in available cash and $2.4 billion of undrawn bank debt facilities. This liquidity position should be sufficient to cover the current period of COVID restrictions.
Sydney Airport has received an indicative, conditional and non-binding proposal from the Sydney Aviation Alliance (comprising a number of superannuation funds) that provides for acquisition, by way of a scheme of arrangement and trust scheme, of 100% of the stapled securities in Sydney Airport at an indicative price of $8.45 cash per stapled security. Sydney Airport Board has rejected this offer. The Board views the offer as opportunistic in light of the COVID-19 pandemic and does not reflect the long term value of Sydney Airport.
What is the market reaction to the HY21 result?
The market reaction to Sydney Airport’s HY21 result is neutral. Sydney Airport’s share price is flat and is currently trading at around A$7.72. Sydney Airport currently trades on an extremely high forward P/E ratio (reflecting the lack of earnings due to the COVID-19 restrictions) and is currently not paying a distribution to security holders
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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