Is the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price a buy right now because of the coronavirus selloff?
Since 21 February 2020 the share price is down by a third. Since mid-January the share price is down by almost 40%.
It's been a really rough period for the airport operator. At the start of the year there was a fear that earnings would be hit by the lower levels of Chinese passengers.
But now all types of passengers have stopped. Whilst March 2020 'only' saw a decline of total passengers by 45.1%, the first 16 days of April saw a 96.1% decrease in international passengers and a 97.4% decrease in domestic passenger traffic.
The problem is that the rest of the year could see similar reductions in traffic for so long as current restrictions on travel remain in place. This would be bad for earnings and the Sydney Airport share price.
How long will states maintain their strict quarantine measures for anyone coming into a state? How long will international air traffic be almost nothing? These questions are really dependent on the spread of the coronavirus and any potential healthcare solutions to the problem.
Is the Sydney Airport share price a buy?
The formal government restrictions could be here for some time. And people may not want to travel like before for even longer. I know I'm not going to be rushing to the airport to fly to Europe any time soon.
Clearly if air traffic is back to normal this time next year then Sydney Airport appears pretty cheap, particularly with interest rates so low.
If earnings and the shareholder income payments went back to normal then it might offer a 7% yield today. But there may be no income payments to shareholders for a while.
I like that Sydney Airport is thinking about doing some projects whilst the airport is almost empty. But I'm in no rush to buy shares when international travel could be limited for some time.
