Shares of Sydney Airport Holdings Ltd (ASX: SYD) are drifting mostly sideways today despite the infrastructure business reporting a healthy boost in profit for its latest half-year reporting period.
In the six months to 30 June 2015, revenue rose a modest 4.6% compared to the prior corresponding period, with earnings before interest and tax (EBIT) rising a healthy 13%.
"The key drivers of this result were international passenger growth of 2.8% and returns on additional capital investment in aviation infrastructure, commercial business initiatives and operational efficiencies," Sydney Airport Managing Director and CEO, Kerrie Mather, said.
Total traffic growth for the period was 2.1% higher than the same period a year earlier, with international passenger growth from Asia pushing profit higher. Chinese nationals again accounted for Sydney Airport's fastest-growing market, up 16.8% in 2015.
During the period the company said it had also made a number of operational achievements including the landmark $535 million deal with Qantas Airways Limited (ASX: QAN), which will see Sydney Airport take control of Terminal 3 almost three years ahead of schedule.
The company also signed international aeronautical agreements with airlines that represent more than 98% of its passenger traffic. It also delivered the $128.2 million capital investment program on time and on budget.
Looking ahead
Given its strong first half performance, Sydney Airport upgraded full year distribution guidance from 25 cents per security to 25.5 cents per security. In addition to the three aforementioned operational achievements, the redevelopment of Terminal 1 and an assessment of the Western Sydney Airport provide key focus areas for the company looking ahead.
Should you buy Sydney Airport shares?
Sydney Airport is undoubtedly one of the best income investments on the ASX. However, this and its stable upside potential over the long term appears to be already baked into its current share price. Indeed, I'll patiently watch Sydney Airport shares from the sideline until I'm afforded a much more compelling buying opportunity.
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