In their final match of the group stage for The Motley Fool’s ASX World Cup, we have infrastructure group rivals Sydney Airport Holdings Ltd (ASX: SYD) versus Aurizon Holdings Ltd (ASX: AZJ). Having already suffered heavy losses to both Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL), both teams have proven unable to get to the cup’s knockout stages. However, although it may be a dead rubber, neither team will want to walk away from the competition with three straight losses.
Here’s how they line up
|Measure||Sydney Airport (ASX: SYD)||Aurizon Holdings (ASX: AZJ)|
|Market Cap||$9.6 billion||$10.6 billion|
|Forecast P/E Ratio||45||20.4|
|Return on equity||1.7%||7.9%|
|Forecast yield||5.4%||2.9% (90% franked)|
Data Sourced from Morningstar
Sydney Airport Holdings
Backed by our government, Sydney Airport Holdings is the owner and operator of Australia’s busiest airport terminals. Passenger traffic is largely dependent on tourist visitation, particularly from Asian countries and in both April and May passenger traffic increased strongly against the previous corresponding period. Recently however investment bank Macquarie Group Ltd (ASX: MQG) sold its stake in the iconic asset.
With its enviable and exclusive government contract extending for many years coupled with a high dividend yield, Sydney Airport is an extremely well drilled defensive unit. Unfortunately however, when they go forward its seemingly high valuation hangs over its strikers and any shot at goal sends the ball flying over the crossbar with no landing in sight.
At half-time the scores are locked at 0 – 0.
Formally QR National, Aurizon makes a pretty penny supplying rail services to both coal and iron ore miners throughout the country. Although coal prices remain subdued and the price of iron ore has fallen from over $US135 per tonne to below $US95 per tonne so far in 2014, Aurizon benefits from the increased haulage required to compensate for the lower average prices. Its recent takeover offer for AQA Resources Limited (ASX: AQA) was initially poorly received by the market, but provides exposure to the extremely profitable Pilbara region of Western Australia.
At the start of the second half, with a better valuation than rival Sydney Airport, Aurizon’s numerous hours on the training track have paid off. With a number of experienced leaders and the possibility of an even more well-oiled connection between Queensland and the mid-west, Aurizon moves the ball easily through midfield to the key players both east and west. Better late than never, the junior, somewhat expensive but important forward, Aquila Resources, links nicely with Geraldton for a two goal haulage late in the second term.
The game (and puns) end with a 2 – 0 win to Aurizon.
While Aurizon may have won this dual, it cannot win The Motley Fool’s ASX World Cup because it’s already been knocked out by superior rivals with BIGGER dividend yields (see below)…