Australia is really opening up now. A number of states are opening up to each other and Victoria's COVID-19 cases are really low. I've got some recovery ASX share ideas.
These businesses may be lower than their pre-COVID-19 prices now, but I think they could recover strongly over the next 12 months as the country opens up:
Sydney Airport Holdings Pty Ltd (ASX: SYD)
This is the infrastructure stock that probably has the most upside if Australia opens up again. Some Australian states weren't really connected with Sydney Airport. But now most of those borders are opening up.
Not only that, but international passengers are now starting to return to Australia. New Zealand people are now flying into Sydney Airport. The government is also looking at opening up to other low-risk countries like Japan and South Korea. That could mean more passengers for Sydney Airport.
I'm not expecting an instant return of full domestic passenger volume. But remember that share prices will usually move before activity/earnings. There is a lot of pent up demand for holidays and perhaps interstate travel, so Sydney Airport could see a useful surge over the next few months.
New Zealand, South Korea and Japan are each within the top 10 sources of passengers for Sydney Airport. It's going to be a grind, but as passengers and earnings return, I think investors will like the Sydney Airport share price valuation, particularly when lower interest rates are taken into account.
EML Payments Ltd (ASX: EML)
EML is an ASX share that facilitates various types of payments including gift cards, general reloadable cards, salary packaging cards, virtual accounts and so on.
It's a global business with operations in Australia, North America and Europe. Obviously the company is suffering from the lack of demand of in-store gift cards. The run up to Christmas could be a real boost for the business. A return to (fairly) normal retail conditions in Australia would also be really useful for its earnings.
The EML share price has been rising recently and I think it could continue on this trajectory as Australia's COVID-19 situation stabilises and a vaccine (hopefully) gets closer.
I think this ASX share could be a long-term performer from the current level and a good recovery idea.
Tyro Payments Ltd (ASX: TYR)
Tyro is another payments business. It provides the technology for merchants to receive payments. There's a good chance your local café may have one of Tyro's terminals (or soon will), particularly after the recent deal with Bendigo and Adelaide Bank Ltd (ASX: BEN).
I thought Tyro was a good recovery ASX share play even before this deal because more people out and about should mean more processing volume for Tyro.
But the deal with Bendigo Bank is a good boost. It will see Tyro deploy more than 26,000 Tyro terminals in 2021 with the new alliance as it replaces Bendigo's existing network and the economic benefits will move to Tyro. Bendigo Bank will also exclusively refer new merchant opportunities from its business customer base to Tyro, under a co-brand.
Tyro is expecting that Bendigo Bank's business customers will generate approximately $5 billion in transaction value in FY22. Tyro's gross profit share (after gross profit share to Bendigo Bank and before operating costs) from the Bendigo Bank cohort will be approximately $19 million in FY22.
I think Tyro is another good recovery ASX share option.
Foolish takeaway
I think all three of these ASX shares are interesting ideas and could rise as Australia's borders and economies open up again. At the current prices I think I'd go for EML Payments first, as it's the one that has the potential for truly global growth.
