The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has climbed 3% to $7.05 in morning trade after the release of its half-year results.
Here are the key highlights:
- First-half revenue up 7.9% on the prior corresponding period to $714.2 million.
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $577.6 million, up 7.7%.
- Profit after tax up 4.4% to $166.6 million.
- Upgraded 2017 distribution guidance to 34.5 cents per share, up 11.3%.
Sydney Airport certainly can thank the inbound tourism boom that Australia is experiencing for this solid half-year result. According to today's release, the 7.9% top line growth was largely driven by growth in international passenger numbers.
On a rolling 12-month basis the airport saw record inbound passenger growth of 10% on the prior corresponding period. This was thanks largely to stellar growth from Asia, with particularly strong growth from China, Japan, and South Korea.
A further catalyst was the performance of its Retail segment. The completion of the Heinemann Duty Free stores and the opening of new specialty and food and beverage offerings led to a 14.3% increase in segment revenue growth.
Finally, the company's Property and Car Rental segment posted a 3.3% lift in revenue and its Car Parking and Ground Transport segment saw revenue growth of just 2.2% due partly to the growing popularity of ride sharing services.
Should you invest?
I think that Sydney Airport is up there with Mantra Group Ltd (ASX: MTR) and Star Entertainment Group Ltd (ASX: SGR) as one of the best options for investors looking to profit from the tourism boom.
Although tourism has grown strongly over the last few years, I still believe there is significant growth ahead due largely to China's growing middle class.
In June Chinese visitor numbers overtook those of New Zealand to become Australia's largest visitor group.
Whilst this is impressive, it is worth noting that Australia was only the 13th most popular destination for Chinese tourists in 2016, providing the country with approximately one million visitors.
By contrast, Thailand, South Korea, and Japan were the three most popular destinations in 2016 and attracted approximately 8.8 million, 8 million and 6 million Chinese tourists respectively.
I believe this demonstrates how tourism from China could still increase substantially over the next decade, making Sydney Airport a great buy and hold investment option.
