The August reporting season is almost upon us. That means owners of Sydney Airport Holdings Pty Ltd (ASX: SYD) shares have a few things to keep an eye on next month.
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What to watch if you own Sydney Airport shares
August can be somewhat overwhelming if you own lots of ASX shares. I always find that it's easier to narrow in on a few key factors in order to stay focused on what matters.
I think it pays to think about what is impacting Sydney Airport shares right now. COVID-19 lockdowns, state and national border closures and the recent failed takeover bid are a few that spring to mind.
Sydney Airport generates revenue from aviation, retail, property and car rentals, as well parking and ground transport. That means anything that influences these revenue streams will impact future earnings expectations, and therefore the value of Sydney Airport shares.
Clearly, the COVID-19 pandemic has uprooted the status quo for Sydney Airport. Revenue across all sources plummeted in FY2020 with widespread lockdowns and borders remaining shut. So, what can investors look out for in August?
Outlook for the travel industry
I personally think it pays to look across a broad range of the industry. For instance, keeping an eye on results from travel agents like Webjet Limited (ASX: WEB) can help to paint a picture of expectations for FY2022 traffic numbers.
It follows for a company like Sydney Airport that more travellers are likely to lead to more demand for retail, property and car rentals, as well as parking and ground transport. More traffic means higher earnings and that's good news for Sydney Airport shares.
The key for Sydney Airport is really how quickly restrictions ease and borders open. That's tough to determine right now, but management commentary from the company itself and other travel industry stakeholders could be useful.
I'd keep an eye on results from the major airlines right now. That means watching out for Qantas Airways Limited (ASX: QAN) and Regional Express Holdings Ltd (ASX: REX) results in August. Any notable commentary on expectations for FY2022 could drive Sydney Airport shares in either direction next month.
Acquisition updates
The other looming factor is Sydney Airport's status as an acquisition target. Sydney Airport shares surged by 34% in early July after a $22 billion takeover bid by an IFM Investors-led consortium.
Any news, positive or negative, or further takeover offers, look like a major factor in moving Sydney Airport's value. We saw from the early July surge that this is likely to cause the biggest value swing. I'd be watching closely to see who is circling Sydney Airport and whether any bids will move the company's share price in August.
