Sydney Airport Holdings Limited (ASX: SYD) has released its traffic numbers for August showing that domestic traffic continues to struggle while international traffic is improving. Is it time to buy?
About Sydney Airport
Sydney Airport Holdings is the company that operates the Kingsford Smith Airport. It currently has a 99-year lease on the airport, which 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.
August Traffic Numbers
Sydney Airport showed mixed results in August, with domestic traffic continuing to be weak while international traffic is improving. Compared to August 2018, domestic traffic was down 1.3% and international traffic was up 2%. Total traffic numbers were down 0.1%.
In the 12 months to August 2019, Sydney Airport reported total traffic of 44,298,000, up 0.1% from the 12 months to August 2018. However, year-to-date traffic remains down 0.3%.
International traffic improvements are being driven primarily by the US and India, which have seen 10.8% and 8.1% growth respectively year-to-date.
The weakest results year-to-date are from the UK, down 4.8%, and Malaysia, down 7.7%.
Buy, Hold Or Sell?
Sydney Airport shares currently offer an unfranked dividend yield of 4.83% and shares are up 22.5% year-to-date. Traffic numbers have been weak all year and, although results look stronger than last month, there hasn’t been any sustained material improvement.
Sydney Airport recently reported half-year results which showed revenue growth of only 3.4% in 1H19. With slow growth and weak traffic numbers, it’s hard to justify the share price growth this year and it looks as though Sydney Airport shares may be overvalued.
For now, I’d rather invest in one of the dividend-paying shares in the free report below.
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Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.
