The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price could be a mover today after revealing its half year result to investors.
Sydney Airport Holdings is the company that operates the Kingsford Smith Airport, it currently has a 99-year lease on the airport but it will revert back to government ownership at the end of this century. According to Sydney Airport, it generates $30.8 billion in economic activity a year, which is equivalent to 6.4% of the NSW economy.
Here’s What Sydney Airport Revealed In HY19
Sydney Airport reported that total revenue grew by 3.4% to $797.1 million. There was a decent performance across the board from its individual segments. The big divisions showed aeronautical revenue grew by 4.7% to $361.3 million, retail revenue increased 4% to $184.2 million and property & car rental increased by 1.8% to $120.3 million.
Regular users of Sydney Airport’s car park may like to know that parking and ground transport revenue fell 1.4% to $77.6 million.
The recent decisions made by the Court of Justice of the European Union prompted reconsideration of the status of indemnities in relation to the 2011 sale of Copenhagen Airport. This led Sydney Airport to recognise an indemnity expense of $181.7 million, causing EBITDA (click here to learn what EBITDA means) to fall by 25.4% to $465.1 million.
Net operating receipts (NOR) grew by 4.8% to $431.2 million.
Sydney Airport CEO Geoff Culbert said: “Sydney Airport is a business that continues to perform well across the cycle and this half was no exception. We see ongoing opportunities for growth in our aeronautical businesses and our investment program will continue to deliver capacity and great experiences for our customers.
Sydney Airport Distribution
The business continues to expect a full year distribution of 39 cents per share, which would be an increase of 4% on last year, although this is subject to aviation industry shocks and so on.
Is The Sydney Airport Share Price A Buy?
Whilst the distribution yield of 4.6% is decent in this low interest environment, I think the share price is now too expensive for how slow growth is at the moment, particularly in Australia or the global economy goes through a dip.
I’m also concerned by the falling number of domestic passengers, which Sydney Airport can’t control and this could hurt profit if it continues.
I believe there are better opportunities for dividends and growth over Sydney Airport such as the reliable and proven businesses in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.