It has certainly been a tough 12 months for the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price.
With travel markets impacted greatly by the pandemic, the airport operator's shares have fallen heavily.
Since this time last year, the Sydney Airport share price has lost approximately 25% of its value.
Is this a buying opportunity?
One broker that believes this is a buying opportunity for investors is Goldman Sachs.
In response to its full year results release this week, the broker has reaffirmed its buy rating and $6.73 price target.
Based on the current Sydney Airport share price, this price target implies potential upside of approximately 11% over the next 12 months.
And with Goldman predicting that the company could start paying dividends again in FY 2021, the total return on offer with its shares is over 12% according to the broker.
Why is the Sydney Airport share price good value?
Goldman is a fan of the airport operator due to its monopoly in Sydney and its position as the main gateway in Australia.
The broker explained: "We remain Buy-rated on Sydney Airport with a 12-month target price of A$6.73 presenting c.11% upside at current levels (vs. 2% average for our coverage). SYD is an unregulated monopoly asset and the primary aviation gateway to Australia, a structural position that is not going to change following the Covid-19 pandemic."
In addition, its analysts have been impressed with the way the company has gone into hibernation during the pandemic.
Goldman commented: "Management's swift and astute management of key operating and capital costs during the course of the pandemic has effectively put the airport into hibernation, whilst limiting structural impediment to its financial recovery as/when passenger volumes resume. […] On the analyst briefing, the company indicated that had operated at a cash burn rate of c.A$5-10mn/mth during the final months of CY20, during which time passenger movements, both domestic and international, were severely disrupted."
So with Sydney Airport having liquidity of $3.5 billion ($1.1 billion in cash and $2.4 billion in undrawn debt facilities), it is very well-positioned to ride out this storm.
Dividends to resume soon
Looking ahead, the broker is confident that its dividends will resume once trading conditions return to normal.
"We expect SYD to be major beneficiary of the domestic inoculation strategy, as the program limits the spread of the virus and likelihood of state-border closures. While SYD provided no guidance or outlook, with the balance sheet well-supported post last year's equity raising, we can be comfortable that as soon as profitability and cashflows return, dividends too are likely to resume."
In fact, based on the latest Sydney Airport share price, Goldman estimates that it offers investors dividend yields of 4.5% and 5.2%, respectively, in FY 2022 and FY 2023.
