SYD - Sydney Airport

Not the best two (2) weeks as syd struggled to make any impression on the $3.19 resistance. Fortunately syd found support at the $3.12 level.



The statistics still show syd in a favourable light.



It will be interesting to see whether syd can rally from here and continue a north bound journey.
as always D.Y.O.R. and good luck

SYD bounced off the $3.12 support level, pushed through the resistance at $3.19 and continued to climb like a boeing 747 lifting off the runway at Kingsford Smith Airport. Peaking at $3.48 the share price drifted down to $3.31 (must have been a refueling stopover) then rallied again to $3.46. SYD traffic figures released for October 2012 were "best ever" for an October. It would appear that there are plenty of people traveling and Sydney Airport has worked out a few angles to maximise the revenue they can extract from the Airlines and the through traffic.

On 5 November 2011 Sydney Airport (SYD), (then known as Macqaurie Airport - MAP) hit an interday high of $3.59. In December 2011 they undertook a capital return to holders of $0.80 per unit. In addition they also declared an end of year dividend of $0.10 per unit (to be paid in February 2012). When the share went ex-div the price dropped to $2.54 per unit.
On Friday, 7 December 2012, one (1) year and one (1) month later, SYD reached $3.55 and is due to release a further $0.10 distribution per unit held, going ex entitlement on 21 December 2012, taking the 2012 return to shareholders to $0.21.




I must remember to send Mr Moore & Ms Livingstone Christmas cards this year.

ps: It is worth noting that at $3.55 the share price has reached parity to the claimed net tangible assets per share. The question going forward is: Is syd worth a premium to NTA?

It would seem that some elements of the market have determined that SYD is not worth a premium to the claimed nta. I have recently read where one analyst considered that SYD had a target of $3.44 (before the spike) and another in the last few days nominating SYD as a sell with a target value of $3.29. This week SYD got dumped pushing down from the support level of $3.38 on Tuesday/Wednesday to close out Thursday at $3.26, then the flood gates opened on Friday, opening at $3.22 sinking to close on the days low of $3.08.

A Commonwealth Bank analyst issued a report that Sydney Airport may hit capacity in another 12-14 years approximately 20 years earlier than the expectations of Sydney Airport Directors etc. Sydney Airport issued a release to the effect that the analysis was based on false data/assumtions and pointed out why it was wrong (in their opinion anyway). The market as always made up it's own mind.

The volumes early in the week were relatively normal arround 3-4 million per day, but Thursday saw the turnover double to 7.9 million shares and Friday leapt to 27.4 million shares sold. The volume weighted average share price for Friday was $3.12 with the bulk of turnover going through around $3.10. The close was a little anticlimatic. In recent weeks the volume in the closing auctions has been between 20-30% and as much as 50% of the days turnover. Fridays close only had aproximately 1.2 million turnover in the auction.

The turnover for Thursday/Friday, to me, suggests that one of the major share holders decided to unwind or reduce their position. Assuming that they bought prior to the share price run up from March lows of $2.45 or even July 2012 sub $2.90, they were well in front at $3.44 and probably thought it a good time to lock in profits and diversify their portfolios. If it were the Abu Dhabi Investment Authority reducing their holding, they would have the added benefit of the Aud$ improving from US$0.98 to this weeks spike above US$1.05.

The sell down probably caught a few day traders up in the torrent as well. Once their stop losses were hit their sells probably triggered a few more sell offs' as they closed out their positions, in turn triggering a few more. The bargain hunters stepped in when it hit $3.08 and some large cross trades went through at $3.10 as well.

The six month chart says it all, the next support level (if it does not rally from here) is $3.02 :



The RSI chart suggests that the sell off has well and truly pushed SYD into oversold territory:



The table in respect of REO, Earnings, Distribution, Yield and Discount to NTA follows:


Personally I consider SYD to be way over sold at this level but what would I know. The market is never wrong. As always do your own research and good luck.

Very interesting theory nulla nulla. It's great for first time traders like myself to learn from people like you.

I've been watching SYD for a few months now and will most likely buy in some time over the next day or two.

I wonder if the major player reducing their position can be attributed to the ATO tax audit? It makes sense for them to dump stocks and earn a healthy profit and AUD at the same time while escaping even a minor risk of trouble with the ATO.

Thanks nulla

SYD was on my watchlist.

Next support is at $3.00 though with the vigour of the selloff, it may continue it's descent to stabilise at $2.75.



For what it's worth, brokers seem to be suggesting, in the popular press, to sell stocks from all sectors down.

Very unusual for them.

Maybe it's time to buy !!

gg

PointBlank said:

Very interesting theory nulla nulla. It's great for first time traders like myself to learn from people like you.

I've been watching SYD for a few months now and will most likely buy in some time over the next day or two.

I wonder if the major player reducing their position can be attributed to the ATO tax audit? It makes sense for them to dump stocks and earn a healthy profit and AUD at the same time while escaping even a minor risk of trouble with the ATO.

Click to expand...

Please note, in no way am I recommending anyone buy SYD on the basis of my ramblings. While SYD could conceivably bounce from this area it could also drop further. As you point out there is an issue of a tax audit. SYD have advised that they are working with the ATO. I understand there was a ruling from the ATO that SYD were applying and that the ATO subsequently changed the ruling. No doubt there will be a resolution down the road.

Some parties have interpreted the disclosure to market by SYD of the ATO audit as a profit warning. My understanding is that it relates to the payments on preference shares and whether SYD is entitled to treat the payments as deductable interest or whether in fact they are distributions of profit and hence non deductable. No doubt the legal fraternity will make a good earner out of this.

If it is a profit warning, I expect the share price will go the way of SGP (which also had a profit warning), down then steadily back. After all, their income stream is constantly growing alongside traffic and passsenger numbers. This could be a wave of sellers following broker sell recommendations trying to beat any further sell down if the ruling goes against SYD, but I feel the volumes point more to a substantial share holder reducing holdings more than holders following broker recommendations. As GG points out, the next support level is arround $3.02 then it drops to arround $2.82. That would be overkill imo. The other point GG makes is "Often when everyone says buy, it may be time to sell. And when everybody says sell, it may be time to buy" ?????:1zhelp:

The big risk as I see it, is that the sell off is someone like the Future Fund. The Future Fund was a large holder but Murray reduced the holdings before the $0.80 capital return. I don't know whether he reduced it below 5% or sold it down completely. However the Future Fund (Murray has since left) is making a bid for the assets of AIX (Tullamarine Airport and a few smaller ones) and if they retained any shares they may be cashing out in a hurry to fund the deal. A need to exit in a hurry could push the price even lower.

What really surprises me is that there was nothing about the price fall of SYD in this weekend papers?

As always, Do Your Own Research and Good Luck.

the SYD 2030 IBLs offer quite a tasty yield - 6.9% if inflation is 2.5%

Not a bad yield in the "new normal" era

Reduced volumes today, while still higher than recent average daily volumes. The tickle down to $3.09 from $3.13 after the market opened looked like the downward journey may be going to continue. However buyers came in and the share price rallied to the $3.15-$3.16 area with good support at $3.15. Touched $3.17 just before close and held $3.16 in the auction with arround $1.4million shares turned over. At least it wasn't a sell off today.

I'm looking for a recovery to arround $3.31+ but I'm not expecting it any day soon. As always d.o.y.r and good luck

Since going Ex-div on 21/12/2012 SYD has fallen from the closing price of $3.56 on 20/12/12 to close out on 18/1/13 at $3.05. Some $0.51 (or 14.33%) has been wiped off the share price. Almost $1 billion has been wiped off the capital value.


The next support level is still $3.01 followed by $2.80. Surprisingly the only recent publicity, since the price fall gathered steam, has been the articles about the Future Fund getting approval from the AIX shareholders for the Future Fund to acquire the assets of AIX; and the December traffic figures for SYD being a new record.

Even the growth in traffic was not enough to stem the share price fall. A short moderate volume rally on Monday was followed the rest of the week by the sell off of larger volumes. I suspect that my suspicion that the Future Fund is divesting shares to raise capital may have some grounds. There have been no recent updates to foreign ownership divestment that would explain such a large sell down or any recent notices of substantial share holding changes.



For every seller there has been a buyer. There have been some large cross trades and a lot of smaller retail sized parcels changing hands. No doubt day traders having to quit their holdings when stop losses levels have been hit has also contributed to the fall. As the market embraces the rest of the infrastructure shares and REIT's some one is eventually going to point the finger to SYD as being favourably priced atm, imo. As always do your own research and good luck. I hold.

Sydney Airport appears to have pulled out of the dive and may have averted a crash landing, lifting up from the support area of $3.01. The next support area is $3.18 (hopefully not a resistance level now) followed by $3.31.



The RSI shows the moving average has dropped to $3.21 and SYD is still in the oversold area at Fridays close of $3.14. Interestingly, over the last nine (9) trading days the average daily turnover has risen from Five (5) million shares per day to over Ten (10) million shares per day.



Maybe someone pointed the finger and said SYD is now a buy. Probably more likely that yield investors see SYD as a better return and less risk than bonds and bank rates. I continue to hold looking for $3.31 - $3.42 plus. As always do your own research and good luck.

considered it when it was cd, however the price had everything built in.

at current levels it's decent for long term dividend returns,but it wont fly over 3.50 any time soon.

nulla nulla said:

Maybe someone pointed the finger and said SYD is now a buy.

Click to expand...

Julia Lee from Bell Direct has selected it as her pick for the week. This gets run daily on Sky Business.
I kind of agree with her.
But it's not a great growth story.
It's just a sensible alternative to a bank account with a chance of a rise with the tide.

nulla nulla said:

Since going Ex-div on 21/12/2012 SYD has fallen from the closing price of $3.56 on 20/12/12 to close out on 18/1/13 at $3.05. Some $0.51 (or 14.33%) has been wiped off the share price. Almost $1 billion has been wiped off the capital value.

............ There have been no recent updates to foreign ownership divestment that would explain such a large sell down or any recent notices of substantial share holding changes.

Click to expand...

A double check on recent anouncements show my post above was wrong as a notice of "change of substantial holding" had been lodged on 17 January 2013, some two days previousy.

To correct my oversight I point out that FMR LLC and FIL advised the market on 17 January 2013, that since their last advice of 16 July 2012 they had purchased 8,344,861 shares and sold 32,711,377 shares reducing their holding from 8.37% to 7.06%. Since then FMR LLC and FIL advised the market again on 28 January 2013 that they have reduced their holding from 7.06% to 6.02% by selling off a further 19,318,280 shares. Their posting for 17 January provides 25 pages of buys and sells. Their posting of 28 January doesn't provide a break up of the buy sells in the intervening 11 days.

Sydney Airport advised on 7 january 2013 that foreign ownership had reduced from 36.7% to 35.8% and on 29 January 2013 Sydney Airport again advised that foreign ownership had reduced from 35.8% to 34.1%. There will probably be another anouncement next week to reflect the further reduction by FMR LLC and FIL.

On a positive note, Unisuper anounced on 29 January 2013 that they had become a substantial share holder with a holding of 5.05% of shares on issue. During the same period that overseas investors were selling down (yes there was another one, the Capital Group, more on it shortly) Unisuper lifter their holding from 60,113,564 to 93,929,847 by acquiring a further 33,816,283 shares.

The Capital Group filed a "Ceasing to be a substantial holder Notice" on 28 January 2013, they have now dropped below the 5% threshold so do not need to file any further notices in respect of any further sell downs. The Capital Group did supply details of the buys and sells undertaken in the period since they lodged their previous notice. I obviously have too much time on my hands as I decided to put together an Excel Spreadsheet of the buy/sells to see if they were trading long or short and to see if I can work out what sort of returns they were getting. So I put the information in an here is the spread sheet in a table:


On the basis that the 19 million shares purchased in the period covered were included in the almost 36 million shares sold, using the average cost of shares bought deducted from the average realisation per share sold they made $6.3 million capital gain on these shares alon. Additional they realised dividends of $4.1 million on these share alone for the period invovled. A total return of 19.04% on the shares bought. Probably as much again or more on the other 17 million of shares sold.

Not a bad return by anyones perspective.

The chart shows SYD has bounced off the lows of $3.04 and the next level of resistance/support is the $3.31/$3.32 area:



Lets hope that there isn't any more major sell downs by international shareholders in the forthcoming weeks. I'm still not convinced that that the Future Fund wasn't selling off residual holdings at the same time. Their need to cashup to settle the AIX asset acquisition is too much of a coincidence in my opinion. The international holders sell down alone was not enough to account for the volume of sales in this period. As always, do your own research and good luck. I hold .

Excellent research as usual Nulla. I suspect the sell down has finished for the time being as there seems to be strong support for the stock, which is understandable given the underlying fundamentals.

I sold my personal holdings after the strong run up to $3.50-$3.60 region as I believe the upside from there is limited, there were a few other reasons as well. However, I added some more to the SMSF holdings at $3.08 as its a great long term hold IMO

I was hoping that $3.17 would be a support level and SYD would start to climb back up over the $3.31 mark. Not to be. SYD dropped back to $3.11 on a bit of a sell off again and has struggled to climb back even though strong buying in Fridays auction pushed the price up to $3.18. Today saw a retreat back to the $3.15 area.



The only negative at the moment appears to be the ATO issue. The market appears to be waiting to see the report due out on 27/2 to see how the exposure is dealt with even though the position of SYD was outlined fairly well when the market was updated.

Like everyone else I will have to wait and watch. Mind you I have some funds ready if there is another retrace to the low $3.05 area. As always do your own research and good luck.

PS: This is Friday's chart.

The report came out on wednesday and I thought it was pretty good. This years div paid entirely out of earnings; a bigger profit than last year; finance arrangements in place for the next few years at lower cost; and confidence of further growth next year and going ahead.

The market seemed to like it on Wednesday as well, with the market pushing the share price up (after the audio presentation) to close out the day at $3.20. The next day opened even better at $3.22 however the share price then worked gradualy down to $3.17 where SYD finally seemed to find some support. Friday saw SYD try to climb again, reaching $3.20 in a short burst but some determined sellers pushed SYD back to the $3.17 - $3.18 range again with SYD closing out the day in the auction on $3.18.



SYD may have found support for now at the $3.17 level but still seems to be struggling to recover from the December/January sell down. At this point the yield and price/earnings is better for long term holders although it will suffer from compression if the share price rallies. With the growth going forward it will be interesting to see if the yield keeps pace with any share price gains. As always do your own research and good luck.

A fickle market saw syd pushed down earlier in the week. It seemed that syd would revisit the $3.10 - $3.11 level but it managed to close out at $3.12. I was strarting to think the support levels were getting higher and considered topping up. Thursday saw 14 million share change hands with solid support at the $3.14 - $3.15 levels. Then on Friday the buyers stepped up the pace with determination pushing the price up to $3.22 with over 33 million share turning over.



No news releases, nothing in respect of the ATO issue, so purely speculative this is what I reckon might be happening:

1. There is a takeover offer for SYD from Chinese investors;
2. Someone knows that the ATO has decided not to pursue it's claim against Sydney Airport and is buying;
3. Shorters decided to close out their positions;
4. International investors are taking advantage of the dip in the AUD$ and are buying in;
5. The expectation of growth in earnings combined with divs fully funded from earnings means higher divs; and
6. None of the above.

Mind you I will pay close attention to any announcements in regard changes in foreign ownership levels. The volumes could be the start of another large dividend/capital gain play like the one closed out in January. As always do your own research and good luck.

7. Most of the other bank beating safe ish interest rate paying stocks with a bit of growth potential are fully priced.
So investors are turning to other things with better returns even though they have almost zero growth potential?

I suspect it is a combination of points:

7. Most of the other bank beating safe ish interest rate paying stocks with a bit of growth potential are fully priced. So investors are turning to other things with better returns even though they have almost zero growth potential? (which makes SYD look attractive in a bullish market);
3. Shorters decided to close out their positions (because buying per 7 above will lift the share price);
4. International investors are taking advantage of the dip in the AUD$ and are buying in; and
8. The volumes could be the start of another large dividend/capital gain play like the one closed out in January.

The player that closed out in January took capital gains and two distributions on the shares sold alone in excess of 19% of capital invested. Obviously they also took two divs as well on the capital they still hold. So I'm curious to see if they try it again.