Sydney Airport Holdings Ltd (ASX: SYD) revealed today that the number of international passengers grew by 3.5% in November.
Sydney Airport Holdings is the company that operates the Kingsford Smith Airport, it currently has a 99-year lease on the airport but it 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.
Sydney Airport November 2018 Passenger Update
Sydney Airport revealed that international passengers grew by 3.5% to 1.35 million in November 2018 compared to the same month last year. Domestic passengers declined by 1.1% to 2.38 million. That means total passengers increased by 0.5% to 3.74 million.
The Sydney Airport CEO Geoff Culbert said: “Domestic passenger traffic of -1.1% was impacted by a strong prior corresponding period in addition to weather disruptions.”
International passenger growth is gliding higher thanks to increases from a few key countries. In November 2018, Chinese passengers grew by 7.6%, Kiwi passengers increased by 5.7%, USA passengers increased by 8.4%, Japanese passengers went up by 7.1% and Malaysian passengers flew higher by 14.9%.
Is it time to buy Sydney Airport shares?
It’s good to see Sydney Airport notched up another month of growth. But that growth seems to be slowing – trees don’t grow to the sky after all.
Many investors consider Sydney Airport as a ‘bond-proxy’, meaning its share price and valuation could be linked to what interest rates are doing. If interest rates fall, shares like Sydney Airport look better. If interest rates rise, shares are relatively less attractive.
My concern is the US Fed just increased interest rates again. So whilst Sydney Airport offers a yield of 5.4%, it could be a ‘yield trap’ if the shares fall in value.
I think there could be better-priced growth options out there, such as the two shares in the free report below.
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