Demand and Supply: Looking at capacity requirements for Sydney Airport

Sydney Airport (SYD) is the owner and operator of the sole international airport in New South Wales, Kingsford Smith Airport. We have reviewed two of the chief value drivers for the company over the medium to long term: 1) The ability for SYD’s Kingsford Smith Airport to absorb the growth in passenger volumes on the back of increased tourism, particularly from China 2) The development of the proposed second Sydney airport at Badgerys Creek, Western Sydney. Over the long term the growth in passenger volumes through the Sydney Airport has been consistent and substantial. This trend can be seen in the aggregate data below. Looking forward, strong growth is expected to continue, particularly given the twin factors of a lower Australian dollar bolstering overall tourism and expectations of continued strong growth from Chinese tourism. Our latest report looks more closely at the question of capacity requirements for Sydney Airport and how we view the stock at current prices. (VIEW LINK)