Slow Vaccine Rollout to Delay Sydney and Auckland Airport Recovery, but Long-Term Growth Still Solid

Vaccines don’t end pandemics; vaccinations do. This fact has hampered the recovery expectations of many businesses, perhaps none more so than international travel. Despite the encouraging availability of several COVID-19 vaccines, which have largely tracked our expectations, the slow pace of vaccinations globally has kept the borders of Australia and New Zealand mostly closed to outside tourism. We still think there’s pent-up travel demand among consumers, which should result in rapid growth in lucrative international traffic at each airport once borders are open. But with Australia’s Health Department suggesting borders could remain closed through the better part of calendar 2021, and New Zealand likely following suit, we’ve pushed back our expected start to this rebound until late this year versus roughly March 2021 previously. Nonetheless, our fair value estimates for each company remain unchanged, at AUD 6.20 per security for Sydney Airport and NZD 6.50 (AUD 6.00) per share for Auckland, with Sydney screening as the more attractive of the two at present.