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Sydney Airport Price Down On Full Year Results

Tim Montague-Jones

Tim Montague-Jones has over 20 year investment management experience working in the financial markets. Previous experience includes a ten year stint at Morningstar as a Senior Equity Analyst/Portfolio Manager, founding the Morningstar Growth Portfolio and a founding member of their Investment Committee. Tim was also a Senior Equity Analyst for Macquarie Group and a member of the winning team to obtain the 2016 LONSEC Fund Manager of the Year award.

Shortly before market open, Sydney Airport Holdings (ASX: SYD) reported their full year results for period of FY19. The company delivered an EBITDA of $1,336m, in line with market expectations of $1,322m, with a final dividend distribution of 19.5cents taking the full year payment to $39 cents. SYD delivers a history of earnings resilience and solid compound growth in cashflow over the last two decades as the cost of air travel as a percentage of discretionary expenditure has fallen thus opening the opportunity for people to travel more often and adding new capacity and volume for air traffic.


Sydney Airport Holdings (ASX: SYD) reports full year results for FY19. The company delivered EBITDA in line with market expectations. (Credit: AirportTechnology.com).

The company also reported traffic data for the month of January, which has remained stable, primarily due to an outflow of Chinese travelers flying back to China to celebrate the New Year. The drop off associated with the Coronavirus will likely impact February data.

The company is taking advantage of record low interest rates to lock in 20- and 30-year bonds enabling the company to reduce its interest cost on $9bn of debt. The company will invest between $600m to $800m in 2020 and 2021 as it invests back into the airport terminal to cater for growing traffic volumes.

Sydney Airport has a clear competitive advantage as key piece of infrastructure offering a gateway to Australia and New South Wales for travelers. Consistent cash flow ensures this infrastructure asset represent a defensive income currently yielding 4.6%. As such, it appears that long term investors would consider any share price weakness (due to fears surrounding the Coronavirus) as a great opportunity to buy the stock.



This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

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