It's been a tough year for Sydney Airport Holdings Pty Ltd (ASX: SYD) shares. The travel industry has been hammered by the coronavirus pandemic and the Sydney Airport share price has slumped 34.3% lower.
However, I think there is still a lot to like about Sydney Airport shares. Here are a few things I'm weighing up to decide if they represent a good value buy today.
Why the Sydney Airport share price could be good value
I think you have to look at Sydney Airport shares as a long-term buy. Clearly, the company's earnings will be significantly hampered until at least mid-next year but potentially for many years.
It's best to look at Sydney Airport as an infrastructure company rather than a travel company. The group operates the busiest airport in the country and is underpinned by a blue chip asset base.
Sydney Airport just completed a $1.3 billion capital raising to maintain its balance sheet strength. Shareholders supported the raising with a 93% uptake rate at a 1.7% share price discount.
That flexibility will be the key to managing the COVID-19 impact and preparing for a rebound in coming years.
Traffic numbers have plummeted as state and international borders have been slammed shut. That means any hopes for short-term cash flow are probably misguided.
But if you look ahead, domestic and international travel will return. That means the Sydney Airport share price could be worth a look given the steep discount it's trading at right now.
No doubt there are risks to buying any travel-related ASX shares right now. However, the company's assets and operations are vital from an economic and national security standpoint.
Sydney Airport has historically paid a very healthy dividend as well. The long-term outlook still remains solid in my view.
With a market capitalisation of over $14.0 billion, I think Sydney Airport could be a buy. It has the size, strength and strong shareholder backing to withstand short-term challenges.
Foolish takeaway
I think it's foolish to bet on the Sydney Airport share price as a short-term dividend play. The group's shares are paying 6.9% on paper but I wouldn't bank on that in 2020.
Instead, I look at Sydney Airport shares as a long-term infrastructure play. With a strengthened balance sheet and steep share price discount, the Aussie airport company could be in the buy zone.
