There are some S&P/ASX 200 Index (ASX: XJO) infrastructure shares that might be able to see a COVID-19 recovery over the next year or two.
These are businesses that have been heavily affected by COVID-19 but could see a return to pre-COVID levels if things go as hoped.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
The Sydney Airport share price is still down 34% compared to where it was in January 2020.
Broker Morgans thinks that Sydney shares are a buy with a price target of $7.03 over the next 12 months. Morgans likes the business because of the improving passenger situation.
The airline Qantas Airways Limited (ASX: QAN) is seeing a recovery. A couple of weeks ago, Qantas said that corporate travel, including the small business segment, continues to recover and is now at 75% of pre-COVID levels (up from 65% in April). Qantas also said that leisure demand is growing strongly, with deferred international holidays converting into multiple domestic trips.
Qantas is on track to reach 95% of its pre-COVID domestic capacity for the fourth quarter of FY21. Jetstar and Qantas expect to average 120% and 107% respectively of their pre-COVID domestic capacity in FY22.
In Sydney Airport's latest monthly traffic performance for April 2021, the ASX 200 infrastructure share recorded around 1.5 million passengers. That compares to 49,000 in April 2020 and 2.28 million in April 2019 (down 34.8%).
Another positive is the commencement of two-way travel between New Zealand and Australia from 19 April 2021. In April 2021 it saw international travel increase by 21.7% year on year to 53,000.
The downturn in international passenger traffic is expected by Sydney Airport to persist until government travel restrictions are eased.
Morgans expects Sydney Airport to pay a full year FY21 dividend of $0.10 per share.
Atlas Arteria Group (ASX: ALX)
The Atlas Arteria share price is still down 27% compared to where it was in February 2020. However, Credit Suisse rates Atlas Arteria as a buy with a price target of $7.20.
Atlas Arteria is a global owner, operator and developer of toll roads, with a portfolio of four toll roads in France, Germany and the United States.
It has stakes in different roads. There's the APRR motorway network located in the east of France where it has a 31.1% indirect interest. It has a stake in ADELAC, which is a link between Annecy in France and Geneva in Switzerland where Atlas Arteria owns a 31.2% stake. There's the Warnow Tunnel in the city of Rostock of Germany, where it owns a 100% interest. Finally, there's the Dulles Greenway in the US.
The ASX 200 infrastructure share recently revealed its 2021 first quarter traffic and revenue numbers. Compared to the first quarter of 2019, the weighted average traffic was down 20.1%. However, revenue was only down 15.2%. APRR revenue was down just 12%, whilst Dulles Greenway revenue was down 45.1%.
The ongoing government imposed movement restrictions in France and the US continue to be less stringent as the height of the pandemic in March and April 2020.
Atlas Arteria management are expecting further improvements in traffic as restrictions are eased and vaccines are rolled out.
The broker Credit Suisse thinks the traffic recovery will accelerate in the coming months with a full recovery in the first six months of 2022.
Credit Suisse is expecting a full year distribution of $0.27 per share in FY21.
