Morningstar

Morningstar, Inc.

Equity Bottom-Up

Publicly traded Australasian airports saw continued traffic challenges in the first calendar quarter of 2019, highlighted by declines in movements to and from China and weak domestic Australian performance. We continue to think both wide-moat Auckland Airport and narrow-moat Sydney Airport enjoy long-term competitive advantages, but see no margin of safety to account for near-term risk at current prices. We maintain our AUD 7.30 fair value estimate for Sydney and NZD 7.40 (AUD 7.00) estimate for…

Narrow-moat Sydney Airport’s full-year 2018 results were in line with our expectations and keep the firm on track for solid, albeit slowing, bottom-line growth going forward. As reported on Jan. 18, total passenger traffic increased 2.5% in the year, driven by 4.7% international and 1.2% domestic traffic growth. Alongside higher per-passenger rates and the positive mix shift of greater international traffic, regulated aeronautical revenue increased 7.6% versus 2017, while upgrades to retail…

Narrow-moat Sydney Airport’s 2018 passenger traffic reflected further domestic slowdown, but solid international growth, continuing the trends seen in recent quarters and largely tracking our expectations. Full-year international passenger growth of 4.7% was ahead of our 4.0% forecast, offset by domestic traffic growth of 1.2% which slightly trailed our 2.0% projection. Total traffic grew by 2.5% versus 2017, close to our 2.7% target. We expect international traffic growth to decelerate in…

Narrow-moat Sydney Airport’s first-half results reflect continued solid international passenger growth, retail sales gains, and slight operating leverage, largely in line with our expectations. While we expect passenger growth to slow as the year progresses, we remain confident that the airport will continue to enjoy gains well above population growth, alongside further retail spending benefits and expanding EBITDA margins over the long run. To this end, we’ve lifted our near-term profit outlook…

Sydney Airport’s passenger traffic improved nicely in March versus the first couple of months of 2018, and year-to-date is tracking slightly ahead of our full-year projections. But we attribute this improvement largely to timing, given the Easter holiday weekend fell at the end of the first quarter this year versus squarely in the second quarter in 2017, and maintain our near-term forecasts. We expect passenger growth to slow slightly as the year progresses. However, we’re encouraged…

Australia

Sydney Airport operates the Sydney, Australia airport. The Company develops and maintains the airport infrastructure and leases terminal space to airlines and retailers.

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