Anna Kassianos is a senior analyst - materials and energy - with Australian equities manager Platypus Asset Management.
How long have you held Sydney Airport Holdings (SYD)?
We initiated our position in November 2013 post Macquarie Bank’s distribution of its Sydney Airport position to its shareholders (we have maintained a Macquarie Bank position since April 2013), and associated Sydney Airport Trust restructure. We topped up our position in May 2014 in anticipation of further RBA cash rate cuts and expectation for relaxation of the China-Australia flight caps under the new bilateral agreement.
What do you like about it?
We like Sydney Airport for continued international passenger growth, particularly from the large scale emerging opportunities of China and India, and increased patronage from up-gauging of flights to A380s. For example, post the free-trade deal between the Chinese and Australian governments, the new aviation agreement signed in January will enable tripled capacity on routes between China and Australia over next three years. Sydney Airport management is guiding 6.4% growth in distributions, with 100% coverage by net operating receipts. We are expecting 30% growth in net operating receipts by end 2017. Furthermore, Sydney Airport has successfully taken advantage of the low interest rate environment globally, and completed the last portion of bank debt refinance last year, with debt now 100% covered by bonds.
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