Tax Issues Fog Sydney Airport


-Lack of clarity until tax resolved -Traffic growth solid -Stock still attractive

By Eva Brocklehurst

Sydney Airport ((SYD)) is unlikely to find clear air until its tax issues are resolved. According to CIMB this will overhang the stock in FY13 even though the outlook for traffic growth is solid. CIMB estimates the worst case scenario could cost the company up to 7c per share in annual cash flow. Other than that, forecasts are holding up and CIMB has kept a Hold rating with a price target of $3.47. Macquarie believes the share price has already factored in the potential amended tax assessment and also maintains a Hold rating. Macquarie, however, finds domestic growth below expectations. The broker said growth of 4.8% for the month of December appears a little disappointing, given it was previously weak as well. Total traffic grew 5.2% in December with international up 5.8%. Macquarie notes scheduling data suggests capacity growth is likely to drop sharply in the first quarter of this year, with some rebound in the second, back to longer term trend levels of 3-4%. This broker is

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