What: One of Australia's foremost dividend stocks, Sydney Airport Holdings Ltd (ASX: SYD) released its interim report to the market this morning.
With a glossy past record of steady revenue and dividend growth, Sydney Airport continues the trend today as it works towards the realisation of its 2033 Master Plan.
Highlights:
- EBITDA up 6.1% as a result of 2.3% total passenger growth (4.7% international growth)
- $95.5 million of capital invested in capacity expansions + ongoing business improvements
- Distribution guidance of 23.5 cents per share for the year reaffirmed (up from 22.5 cents)
- New low-cost airline Cebu Pacific commences debut Sydney services in September
- Property, car parking and retail subsidiary businesses also growing, now account for 51% of revenue
- Debt refinancing lengthened average debt maturity and spread out the profile (credit rating of BBB/Baa2 maintained)
So What?
I have covered Sydney Airport and its sister Auckland International Airport Ltd (ASX: AIA) in several articles previously, where I talk about long-term competitive advantages both airports can exploit.
Rising material prosperity in Asia, combined with essentially a captive market and low ongoing costs (albeit high capital expenditure) should prove to be a winner for both companies over the next 20 years.
Sydney Airport in particular can stand on its record for delivering shareholder value, and although today's revenue increases might seem modest, when they are likely to occur nearly every year for the next 20 years, you have a real winner on your hands.
Growth in tourism has begun already, with the five fastest-growing tourist groups hailing from Malaysia (up 22.5%), Hong Kong (up 17%), China (up 15.8%), India (up 15.4%), and Singapore (up 9.3%).
In terms of numbers, the five biggest tourist groups come from China, USA, India, Malaysia and the UK, although it is a very close competition and one or two more similar reporting periods will see more Asian nations jump up the rungs.
Now What?
Investors can see that tourism from Asia is already becoming the next big thing in growth for Sydney Airport, and the airport is one company absolutely worth keeping an eye on.
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