SYD - Sydney Airport

[nulla nulla]

Macquarie block traded the residual stake in SYD which they are not distributing in specie this morning. Stocks usually underperform on the day of a block trade.

Todays papers indicate that Macquarie Bank will distribute its' entire holding in Sydney Airport to the Macquarie Bank share holders on the basis of one Sydney Airport share for every Macquarie Bank share held.

The release from Sydney Airport yesterday welcomed the move noting that this would mean an influx of a large number of small share holders to the share registry (you'd have to wonder if that was tongue in cheek). I suspect that some foreign investors in Macquarie Bank may have to unload their SYD holding to keep SYD inside the contraints of foreign ownership limitations. I also suspect suggestions that this could make SYD a takeover opportunity are a furphy due to the presence of foreign investors and those same limitations.

No doubt the influx of small share holders to the registry will also contribute to some future volitility as they work out whether they want to hold, sell or add to their holdings.

Probably a clever move Macquarie Bank. The original issue price was $2.00, however they have had several capital returns over the years and would likely be looking at a significant capital gains tax if they sold at the present share price $4.07. I would not be surprised if they have obtained a tax ruling that the capital gains will be the responsibility of their share holders at such time as the share holders sell the Sydney Airport shares received.

Then again I could be completely wrong (I don't hold Macquarie Bank shares). As always do your own research and good luck.

 

[coolcup]

Todays papers indicate that Macquarie Bank will distribute its' entire holding in Sydney Airport to the Macquarie Bank share holders on the basis of one Sydney Airport share for every Macquarie Bank share held.

Correct. They still had about 25-50m SYD shares after allowing for the 1 for 1 in specie distribution which they block traded on Friday.

I also suspect suggestions that this could make SYD a takeover opportunity are a furphy due to the presence of foreign investors and those same limitations.

MQG would have been working on any potential takeover and the in specie distribution would indicate that there is nothing in the works.

 

[notting]

Badgerys Creek is a lose lose situation for SYD.
It loses it's monopoly or it runs the thing with a fairly large capital outlay to get it going whilst it already carries a massive debt load.
No wonder MQG gave away it's holdings wouldn't want that dragging on you.

 

[notting]

“Malaysia (+22.5%), Hong Kong (+17.0%), China (+15.8%), India (+15.4%) and Singapore
(+9.3%) were our strongest performing nationalities over the half
, showing the continued benefit of strong demand from our Asian neighbours.

Well that's weird. Malaysia that is.
Think I'll go to Sydney air port and jump on a Malaysian plane to Moscow. SYD opens flat :sleeping:

 

[nulla nulla]

A little over a year since my last post (at which time the share price was $4.05) the share price has climbed to $4.95.

Go figure.

 

[notting]

I've been short it twice and got out with teeny profits.
Then went long.

Is doing well out of international travel coming in on lower dollar.
Didn't think of that!
Still think it's a peace of crap for having too much debt and under threat from the second airport when ever that will be built.

 

[piggybank]

The wife and I traveled back to Melbourne from Sydney the other day. Given that we were going to be there for 4 hours we went and got our lunches from different outlets. Coincidentally we had bought the same make and size of water bottle only to find out that one had charged $3.50, whilst the other one cost $4.95. On trying each others water we didn't noticed any difference (in taste, etc)!!

​

 

[skc]

The wife and I traveled back to Melbourne from Sydney the other day. Given that we were going to be there for 4 hours we went and got our lunches from different outlets. Coincidentally we had bought the same make and size of water bottle only to find out that one had charged $3.50, whilst the other one cost $4.95. On trying each others water we didn't noticed any difference (in taste, etc)!!

I believe the $4.95 bottle of water was priced in sync with SYD's share price.

 

[notting]

I believe the $4.95 bottle of water was priced in sync with SYD's share price.

LOL

This is a classic stock that I hate and want to short with every bone in my body.
But it's going up so I'm long it.
The reason I'm long it is because I hate it so much because it has huge debts, is full of financial engineering, pays consistent dividends out of earnings that are all over the place for a business that should be consistent. Brokers seem to like the idea that a second airport will be potentially a part of SYD, I don't for all the above will be exacerbated.

So I stay long to get a feel for when it's going to start turning, I don't know, when banks don't want to roll over over leveraged plays or second airport build costs blow out, what ever. Meanwhile>>>>

 

[nulla nulla]

Two years since my last post and the share price is currently $6.02 having come off a high in excess of $7.50. Getting knocked around at present mostly because of their trying to buy time in assessing whether or not they want to exercise their right of first refusal in the development of Sydney's proposed second airport at Badgerys Creek.

 

[skc]

This could be interesting if it gets any leg.

The ACCC, which monitors airports but does not regulate them, will push for regulatory powers to limit price increases when the Productivity Commission next reviews airport regulation in 2018.

The ACCC's annual monitoring report, released on Monday, found airports were charging airlines more – boosting aeronautical revenues by about $1.57 billion over the past decade – and earning high profit margins on car parking fees. Sydney Airport's parking margins run at 73.1 per cent, while Brisbane Airport's are 66.1 per cent.

http://www.afr.com/business/disturb...ect-accc-calls-for-regulation-20170307-gus88s

 

[galumay]

I am not a shareholder so no self interest from a shareholder perspective, like many things Howard and others privatised, the public pay a high price in the long run. Hopefully the ACCC will act on the price gouging, although I wont be holding my breath!

 

[PZ99]

SYD won't run the second airport citing risk - a good thing IMO given they are already heavily indebted as far I know?

http://www.abc.net.au/news/2017-05-02/sydney-airport-declines-to-run-badgerys-creek-airport/8488616

 

[skc]

SYD won't run the second airport citing risk - a good thing IMO given they are already heavily indebted as far I know?

http://www.abc.net.au/news/2017-05-02/sydney-airport-declines-to-run-badgerys-creek-airport/8488616

3 months ago, the commentary was all about the negatives of a second Sydney airport for the current airport owner.

If they build it themselves they are exposed to lots of risks and poorer free cashflows for the next 10-15 years. If they don't build it than they will be subjected to competition from a new market entry.

Today's decision isn't unexpected. SYD doesn't have the financial clout or appetite to take on building the 2nd airport. It remains to be seen when the second airport is built, how rational a competitor it would be to SYD. It's not quite NBN vs TLS situation as the first airport is not being replaced and chances are it's not really going have significantly less traffic.

 

[luutzu]

3 months ago, the commentary was all about the negatives of a second Sydney airport for the current airport owner.

If they build it themselves they are exposed to lots of risks and poorer free cashflows for the next 10-15 years. If they don't build it than they will be subjected to competition from a new market entry.

Today's decision isn't unexpected. SYD doesn't have the financial clout or appetite to take on building the 2nd airport. It remains to be seen when the second airport is built, how rational a competitor it would be to SYD. It's not quite NBN vs TLS situation as the first airport is not being replaced and chances are it's not really going have significantly less traffic.

Of course it's expected. How will we see the benefit of privatisation if the gov't does not first foot the bill then offload it the moment it's profitable to own.

So that $2B (read $5B) investment by taxpayers for all the infrastructure works you don't see or care for; all that currently cheap land with massive asphalt parking spaces will soon enough be written down to nothing - trick is to put some cheap structure on it so you can write it off; can't leave it as land as you can't write those off. They will all be flogged off about a decade after the built, at a great discount to the initial risk and investment taxpayers have to deal with.

Then who's better, more experienced to run an airport than another airport operator, like SYD? More efficient and so on and so forth.

Gotta love these kind of capitalism.

 

[coolcup]

So... my take on this is:

1. SYD has always said that for it to participate, a large interest free loan would be required from government. Indeed discussions over a number of years has always envisaged this but that assumption had only been dropped by government recently. This made it an NPV negative proposition for SYD and I for one am glad they haven't chased it.

2. It makes much more sense for govt to fund these types of risky ventures. Their cost of funding is the lowest in the land (risk free rates) and the airport is a public necessity (those living in Sydney will understand this). Once it is stabilised and earning a return that private capital is comfortable with, they can extract maximum value through a privatisation. This is a better strategy in my view than giving a private greenfield development rights and an interest free loan to fund the development.

3. Once the airport is stabilised and the government can privatise it (who knows when) SYD will still be in prime position to acquire the asset. Like TCL, they have the most to lose from the asset falling into a competitor's hands so will naturally have a lower cost of capital than most to compete as they will be the only party in the process to potentially have a monopoly in Sydney.

 

[Value Collector]

I have found these few videos helpful in understanding some of the economics of airlines and airports that has helped me work through some of the Pros and cons of Sydney Airport, I found them helpful in making my investment decision.

So I will leave them here incase anyone else can get value from them also, the videos explain multiple points that are relevant to the Sydney airport and the future western Sydney airport.

 

[Value Collector]

This one can help you understand a bit about freight movements.

 

[greggles]

Someone asked me about SYD but I'm not too sure what to make of it at the moment. Looks like a double bottom at $6.40ish in the last few weeks followed by a quick run up to $6.80 where it looks to be consolidating.

Not much news flow recently aside from a 18 January announcement detailing Sydney Airport Traffic Performance for December 2018. The year-to-date figures were positive with growth of 1.2% in domestic traffic, 4.7% growth in international traffic and 2.5% growth overall.

Without a catalyst I imagine it will probably continue to consolidate for a while between $6.80 and $7.00.

 

[Miner]

Someone asked me about SYD but I'm not too sure what to make of it at the moment. Looks like a double bottom at $6.40ish in the last few weeks followed by a quick run up to $6.80 where it looks to be consolidating.

Not much news flow recently aside from a 18 January announcement detailing Sydney Airport Traffic Performance for December 2018. The year-to-date figures were positive with growth of 1.2% in domestic traffic, 4.7% growth in international traffic and 2.5% growth overall.

Without a catalyst I imagine it will probably continue to consolidate for a while between $6.80 and $7.00.

View attachment 92039

thanks Greggles